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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
Commission File Number 333-225519-01

Hydro One Limited
(Exact name of Registrant as specified in its charter)
Ontario, Canada
4911
Not Applicable
(Province or other jurisdiction
of incorporation or organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification Number)
483 Bay Street
South Tower, 8th Floor
Toronto, Ontario M5G 2P5
Canada
(416) 345-5000
(Address and telephone number of Registrant’s principal executive offices)


C T Corporation System
28 Liberty St., New York, NY 10005
(212) 894-8940
(Name, address, (including zip code) and telephone number (including area code)
of agent for service in the United States)


Securities registered or to be registered pursuant to Section 12(b) of the Act: Not applicable
Securities registered or to be registered pursuant to Section 12(g) of the Act: Not applicable
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Title of Class: Debt Securities
Information filed with this Form:
☒
Annual Information Form
☒
Audited annual financial statements
Number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2025:
599,781,811 Common Shares outstanding
0 (Nil) Series 1 Preferred Shares
0 (Nil) Series 2 Preferred Shares
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒Yes
☐
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).
☒Yes
☐
No
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the Registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐





If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐


CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Disclosure controls and procedures are defined in Rule 13a-15(e) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), to mean controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the United States Securities and Exchange Commission’s (the “Commission”) rules and forms.
At the direction of Hydro One Limited’s (the “Registrant”) Chief Executive Officer and Chief Financial Officer, management evaluated disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, management concluded that the Registrant’s disclosure controls and procedures were effective as at December 31, 2025.
See the disclosure provided under the heading “Disclosure Controls and Procedures and Internal Control over Financial Reporting” on page 36 of Exhibit 99.3, the Registrant’s Management’s Discussion and Analysis (the “MD&A”) which is incorporated by reference herein.
Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm
Management is responsible for establishing and maintaining adequate disclosure controls and procedures and internal control over financial reporting as described in the MD&A. Management evaluated the effectiveness of the design and operation of internal control over financial reporting based on the framework and criteria established in the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, management concluded that the Registrant's internal control over financial reporting was effective as of December 31, 2025.
Internal control, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and due to its inherent limitations, may not prevent or detect all misrepresentations. Furthermore, the effectiveness of internal control is affected by change and subject to the risk that internal control effectiveness may change over time.
This annual report does not include an attestation report of the Registrant’s registered public accounting firm regarding internal control over financial reporting.
The report of management on our internal control over financial reporting is provided under the heading “Management’s Report” in the Registrant’s audited consolidated financial statements, which is filed as Exhibit 99.2 and is incorporated by reference herein.
Changes in Internal Control Over Financial Reporting
There were no significant changes in the design of the Registrant’s internal control over financial reporting during the year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the operation of the Registrant’s internal control over financial reporting.


IDENTIFICATION OF THE AUDIT COMMITTEE
The Registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act (the “Audit Committee”). The Audit Committee comprises Helga Reidel (Chair), David Hay, Stacey Mowbray, and Mitch Panciuk. The board of directors of the Registrant has determined that each member of the Audit Committee is “independent” as defined in the Exchange Act and the New York Stock Exchange’s listing standards applicable to the Registrant. Each of the Audit Committee members has an understanding of the accounting principles used to prepare the Registrant’s financial statements and varied experience as to the general application of such accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting.
AUDIT COMMITTEE FINANCIAL EXPERT
The board of directors of the Registrant has determined that it has at least one audit committee financial expert serving on its audit committee. Helga Reidel, David Hay, Stacey Mowbray, and Mitch Panciuk have each been designated as an audit committee financial expert and are each independent, as such term is defined in the New York Stock Exchange’s listing standards applicable to the Registrant. The Commission has indicated that the designation or identification of an audit committee financial expert does not deem that audit committee financial expert an “expert” for any purpose, impose any duties, obligations or liability on such audit committee financial expert that are greater than those imposed on members of the audit committee and board of directors who do not carry this designation or identification, or affect the duties, obligations or liability of any other member of the audit committee or board of directors.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The charter of the Audit Committee requires that the Audit Committee review and approve all policies and procedures for the pre-approval of services to be rendered by external auditors. All permissible non-audit services to be provided to the Registrant or any of its affiliates by external auditors or any of their affiliates that are not covered by pre-approval policies and procedures approved by the Audit Committee, are subject to pre-approval by the Audit Committee. During the fiscal year ended December 31, 2025, the waiver of pre-approval provisions set forth in the applicable rules of the Commission was not utilized for any services related to Audit-Related Fees, Tax Fees or All Other Fees and the Audit Committee did not approve any such fees subject to the waiver of pre-approval provisions.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billable by KPMG LLP to Hydro One Limited and its subsidiaries in respect of professional services for 2025 and 2024 are presented below (in Canadian dollars):
Year ended
December 31, 2025
Year ended
December 31, 2024
Audit Fees(1)
$3,068,268 $2,751,176 
Audit-Related Fees(2)
$568,638 $496,966 
Tax Fees(3)
$23,888 $21,935 
Other Fees(4)
$70,048 $65,770 
Total
$3,730,842 $3,335,847 
Notes:
(1)    The nature of the services rendered were: audit of annual financial statements of the Registrant and its subsidiaries, statutory and regulatory filings including reporting to the Province and services related to securities offerings.
(2)    The nature of services rendered were: translations, audit of the Hydro One Pension Plans, assurance services related to the sustainable financing framework and services reasonably related to the performance of the audit or review of the Registrant’s financial statements that are not reported under Audit Fees.
(3)    The nature of services rendered was general tax advice and compliance.


(4)    The nature of services rendered was accounting training. The 2024 comparative has been re-classified from Audit-Related Fees.
CODE OF ETHICS
The Registrant has adopted a Code of Business Conduct (the “Code”) that applies to all directors, officers and employees of the Registrant, including the Chief Executive Officer and Chief Financial Officer, or persons performing similar functions. A copy of the Code has been posted on the Registrant’s website at https://www.hydroone.com/about/corporate-information/governance. A copy of the Code is available in print to any person, without charge, upon written request to Investor Relations at the executive office address of the Registrant shown above.
OFF BALANCE SHEET ARRANGEMENTS
The disclosure provided under the heading “Other Obligations-Off-Balance Sheet Arrangements” on page 14 of Exhibit 99.3, the MD&A, is incorporated by reference herein.
CONTRACTUAL OBLIGATIONS
The tabular disclosure provided under the heading “Other Obligations-Summary of Contractual Obligations and Other Commercial Commitments” on page 14 of Exhibit 99.3, the MD&A, is incorporated by reference herein.
INTERACTIVE DATA FILE
Concurrent with this filing, the Registrant has submitted to the Commission and posted on its corporate website an Interactive Data File.
MINE SAFETY DISCLOSURE
Not applicable.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
Not applicable.
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
Undertaking
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises or transactions in said securities.
Consent to Service of Process
The Registrant has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.
Any change to the name or address of the agent for service of process of the Registrant shall be communicated promptly to the Commission by an amendment to the Form F-X referencing the file number of the Registrant.


SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.
DATED this 13th day of February, 2026.
HYDRO ONE LIMITED
By:
/s/ David Lebeter
Name: David Lebeter
Title:   President and Chief Executive Officer



EXHIBIT INDEX
Exhibit
Number
Description
2025 Annual Information Form dated February 13, 2026 for the fiscal year ended December 31, 2025.
Consolidated Financial Statements as at December 31, 2025 and December 31, 2024 and for the years then ended, and the accompanying auditors’ report.
Management’s Discussion and Analysis for the fiscal year ended December 31, 2025.
Consent of KPMG LLP (KPMG LLP, Toronto, ON, Canada, Auditor Firm ID: 85).
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934, as amended.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934, as amended.
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Registrant’s Code of Business Conduct.
101
Interactive Data File (formatted as Inline XBRL).
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).





cover.jpg
ANNUAL INFORMATION FORM
FOR HYDRO ONE LIMITED
FOR THE YEAR ENDED DECEMBER 31, 2025
February 13, 2026



TABLE OF CONTENTS
i

S-1
S-1
ii

GLOSSARY
When used in this annual information form, the following terms have the meanings set forth below unless expressly indicated otherwise:
“$” or “dollar” means Canadian dollars, unless otherwise indicated.
“1.41% Notes” means the October 2020 offering of $425 principal amount of 1.41% notes due October 15, 2027.
“2017 Long-Term Energy Plan” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario 2017 Long-Term Energy Plan”.
“2020 Ontario Budget” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – OEB Actions on Electricity Pricing”.
“2023 Framework” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2023 – 2023 Sustainable Financing Framework”.
“2024 Framework” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2024 – 2024 Sustainable Financing Framework”.
“2024 HOI MTN Shelf Prospectus” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2024 – 2024 MTN Shelf Prospectus”.
“2024 HOL Shelf Prospectus” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2024 – 2024 HOL Universal Base Shelf Prospectus”.
“2024 HOHL U.S. Debt Prospectus” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2024 – 2024 U.S. Debt Shelf Prospectus”.
“2025-2036 Framework” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Recent Distribution Rate Applications – Conservation and Demand Management”.
“Addendum” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario Integrated Energy Plan”.
“Affordable Energy Act” means the Affordable Energy Act, 2024, S.O. 2024, c. 26 - Bill 214.
“Annual MD&A” means the management’s discussion and analysis for Hydro One Limited for the years ended December 31, 2025 and 2024 filed on SEDAR+ under Hydro One Limited’s profile at www.sedarplus.com.
“Auditor General Act” means the Auditor General Act, RSO 1990, c A-35.
“B2M LP” means B2M Limited Partnership.
“Board” means the Board of Directors of Hydro One Limited.
1

“Building Broadband Faster Act” means the Building Broadband Faster Act, 2021, S.O. 2021, c. 2, Schedule 1.
“Canadian Energy Regulator Act” means the Canadian Energy Regulator Act, SC 2019, c 28, s 10.
“CDM” means conservation and demand management.
“CEO” means Chief Executive Officer.
“CFO” means Chief Financial Officer.
“Clean Electricity Regulations” means the Clean Electricity Regulations made under the Canadian Environmental Protection Act, 1999, S.C. 1999, c.33.
“CLLP” means Chatham x Lakeshore Limited Partnership.
“common shares” means the common shares in the capital of Hydro One Limited.
“control person” has the meaning given to it under applicable Canadian securities laws.
“CSO” has the meaning given to it under “Business of Hydro One – Employees”.
“Custom IR Method” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Transmission Rate Setting”.
“CUSW” has the meaning given to it under “Business of Hydro One – Employees”.
“DBRS” has the meaning given to it under “Credit Ratings”.
“DERs” has the meaning given to it under “The Electricity Industry in Ontario – Regulation of Transmission and Distribution – Ontario Energy Board”.
“Dividend Reinvestment Plan” has the meaning given to it under “Dividends – Dividend Reinvestment Plan”.
“DMS” has the meaning given to it under “Business of Hydro One – Distribution Business Segment –Capital Expenditures”.
“eDSM” means electricity demand side management.
“Electricity Act” means the Electricity Act, 1998, SO 1998, c 15, Schedule A.
“Electricity Council” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Federal Initiatives”.
“Electrification and Energy Transition Panel” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario 2017 Long-Term Energy Plan”.
“Energy Statute Law Amendment Act” means the Energy Statute Law Amendment Act, 2016, SO 2016,
2

c 10.
“Environmental Assessment Act” means the Environmental Assessment Act, RSO 1990, c E-18.
“EPSCA” has the meaning given to it under “Business of Hydro One – Employees”.
“ESG” means environmental, social and governance.
“Exemptive Relief” has the meaning given to it under “The Electricity Industry in Ontario – Exemptive Relief – U.S. GAAP”.
“Exposure Draft” has the meaning given to it under “The Electricity Industry in Ontario – Exemptive Relief – U.S. GAAP”.
“FCPA” means Fellow of the Institute of Chartered Professional Accountants.
“Financial Administration Act” means the Financial Administration Act, RSO 1990, c F-12.
“GHG” means greenhouse gas.
“Governance Agreement” means the governance agreement dated November 5, 2015 between Hydro One Limited and the Province, as amended and modified from time to time, including by the Waiver.
“GTA” means the Greater Toronto Area.
“HOHL” means Hydro One Holdings Limited, an indirect wholly-owned subsidiary of Hydro One Limited.
“HOHL Senior Debt Indenture” has the meaning given to it under “Material Contracts”.
“HOL Indenture” has the meaning given to it under “Material Contracts”.
“HOSSM” means Hydro One Sault Ste. Marie LP.
“Hydro One” or the “Company” have the meanings given to such terms set out under “Presentation of Information”.
“Hydro One Inc.” has the meaning given to it under “Presentation of Information”.
“Hydro One Limited” has the meaning given to it under “Presentation of Information”.
“Hydro One Networks” means Hydro One Networks Inc.
“Hydro One Remote Communities” means Hydro One Remote Communities Inc.
“IASB” means the International Accounting Standards Board.
“ICMA” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2023 – 2023 Sustainable Financing Framework”.
“ICD.D” means the “Institute of Corporate Directors, Director” designation.
3

“IEP” has the meaning given to it under “The Electricity Industry in Ontario – Regulation of Transmission and Distribution – Ontario Energy Board”.
“IESO” means the Independent Electricity System Operator.
“ITC” means Investment Tax Credit.
“JRAP” has the meaning given to it under “Business of Hydro One – Transmission Business Segment –Regulation – Recent Transmission Rate Applications – Hydro One Networks”.
“kV” means kilovolt.
“kW” means kilowatt.
“Letter Agreement” means the agreement dated July 11, 2018 between Hydro One Limited and the Province.
“LSTA” has the meaning given to it under “General Development of the Business – Chronological Development of the Business – 2023 – 2023 Sustainable Financing Framework”.
“MAAD Application” means an application for a Merger, Amalgamation, Acquisition and Divestiture filed with the OEB.
“management” has the meaning given to it under “Presentation of Information”.
“Mandatory Rate-regulated Standard” has the meaning given to it under “The Electricity Industry in Ontario – Exemptive Relief – U.S. GAAP”.
“Market Rules” means the rules made under section 32 of the Electricity Act that are administered by the IESO.
“Minister of Energy” means the Minister of Energy, Northern Development and Mines for the Province, the Minister of Energy for the Province, the Minister of Energy and Electrification for the Province, or the Minister of Energy and Mines for the Province, as applicable at the relevant time.
“Ministry of Energy” means the Ministry of Energy and Electrification for the Province, or the Ministry of Energy and Mines for the Province, as applicable at the relevant time.
“National Energy Board Act” means the National Energy Board Act, RSC 1985, c N-7.
“NERC” means the North American Electric Reliability Corporation.
“Niagara Line” means the 230 kV transmission line in the Niagara region owned by NRLP.
“Non-Aggregated Holders” has the meaning given to it under “The Electricity Industry in Ontario –Exemptive Relief – Disclosure of Ownership by the Province”.
“NPCC” means the Northeast Power Coordinating Council, Inc.
“NRLP” means Niagara Reinforcement Limited Partnership.
4

“Nuclear Fuel Waste Act” means the Nuclear Fuel Waste Act, SC 2002, c 23.
“OBCA” means the Business Corporations Act, RSO 1990, c B-16.
“OEB” means the Ontario Energy Board.
“OEFC” means Ontario Electricity Financial Corporation.
“Ontario” or the “province” has the meaning given to it under “Presentation of Information”.
“Ontario Energy Board Act” means the Ontario Energy Board Act, 1998, SO 1998, c 15, Schedule B.
“Ontario’s Affordable Energy Future” has the meaning given to it under “The Electricity Industry in Ontario – Regulation of Transmission and Distribution – Ontario Energy Board ”.
“PCBs” means polychlorinated biphenyls.
“Price Cap IR” has the meaning given to it under “Business of Hydro One – Distribution Business Segment – Regulation – Distribution Rates”.
“Protect Ontario by Securing Affordable Energy for Generations Act” means Protect Ontario by Securing Affordable Energy for Generations Act, 2025, S.O. 2025, c. 22 - Bill 40.
“Protect Ontario by Unleashing our Economy Act” means the Protect Ontario by Unleashing our Economy Act, 2025, S.O. 2025, c. 4 - Bill 5.
“Province” has the meaning given to it under “Presentation of Information”.
“PULSE” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario Integrated Energy Plan”.
“PWU” has the meaning given to it under “Business of Hydro One – Employees”.
“rate base” has the meaning given to it under “Presentation of Information”.
“rate-regulated” has the meaning given to it under “Rate-Regulated Utilities – Rate Applications in Ontario – Framework”.
“RBPPAG” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Regional Planning”.
“Registration Rights Agreement” means the registration rights agreement dated November 5, 2015 between Hydro One Limited and the Province.
“Reliability Standards” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Reliability Standards and Regulations for Transmission”.
“Removal Notice” has the meaning given to it under “Agreements with Principal Shareholder – Governance Agreement – Governance Matters – Election and Replacement of Directors – Province’s Right to Replace the Board”.
5

“Reserve” means a “reserve” as that term is defined in the Indian Act, RSC 1985, c I-5.
“return on equity” has the meaning given to it under “Presentation of Information”.
“revenue cap escalator factor” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Recent Transmission Rate Applications – HOSSM”.
“Revenue Cap Index” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Transmission Rate Setting”.
“ROE” has the meaning given to it under “Rate-Regulated Utilities – Rate Applications in Ontario – Framework”.
“RPP” has the meaning given to it under “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – OEB Actions on Electricity Pricing”.
“RPPAG” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Regional Planning”.
“RRF” means the performance-based model set out in the OEB’s Renewed Regulatory Framework for Electricity Distributors.
“RRRP” has the meaning given to it under “Business of Hydro One – Distribution Business Segment – Regulation – Recent Distribution Rate Applications – Hydro One Remote Communities”.
“S&P” has the meaning given to it under “Credit Ratings”.
“Series 1 preferred shares” means the Series 1 preferred shares in the capital of Hydro One Limited.
“Series 2 preferred shares” means the Series 2 preferred shares in the capital of Hydro One Limited.
“Share Ownership Restrictions” has the meaning given to it under “The Electricity Industry in Ontario – Legislative Provisions Specific to Hydro One – 10% Ownership Restriction”.
“Shares” has the meaning given to it under “Agreements with Principal Shareholder – Registration Rights Agreement – Demand Registration”.
“Society” has the meaning given to it under “Business of Hydro One – Employees”.
“Special Board Resolution” has the meaning given to it under “Agreements with Principal Shareholder – Governance Agreement – Governance Matters – Board Approvals Requiring a Special Resolution of the Directors”.
“Specified Provincial Entity” has the meaning given to it under “Agreements with Principal Shareholder – Governance Agreement – Governance Matters – Nomination of Directors – Independence”.
“Transmission System Code” means the OEB’s Transmission System Code.
“trust assets” has the meaning given to it under “Interest of Management and Others in Material
6

Transactions – Relationships with the Province and Other Parties – Transfer Orders”.
“TSF” means Transmitter Selection Framework.
“TS” means transformer station.
“TSX” means the Toronto Stock Exchange.
“TWh” means terawatt-hours.
“U.S.” means the United States of America.
“U.S. GAAP” means United States Generally Accepted Accounting Principles.
“uniform transmission rates” has the meaning given to it under “Business of Hydro One – Transmission Business Segment – Regulation – Transmission Rate Setting”.
“Voting Securities” means a security of Hydro One Limited carrying a voting right either under all circumstances or under some circumstances that have occurred and are continuing.
“Waiver” means the waiver and acknowledgement dated June 18, 2025 between Hydro One Limited and the Province.
7

PRESENTATION OF INFORMATION

Unless otherwise specified, all information in this annual information form is presented as at December 31, 2025.

Capitalized terms used in this annual information form are defined under “Glossary”. Words importing the singular number include the plural, and vice versa, and words importing any gender include all genders. The Annual MD&A is specifically incorporated by reference into and forms an integral part of this annual information form. A copy of this document has been filed with the Canadian securities regulatory authorities and is available on SEDAR+ under Hydro One Limited’s profile at www.sedarplus.com.

Unless otherwise noted or the context otherwise requires, references to “Hydro One” or the “Company” refer to Hydro One Limited and its subsidiaries taken together as a whole. References to “Hydro One Inc.” refer only to Hydro One Inc. and references to “Hydro One Limited” refer only to Hydro One Limited.

In addition, “Province” refers to the Province of Ontario as a provincial government entity, and “Ontario” or the “province” in lower case type refers to the Province of Ontario as a geographical area. References to “management” in this annual information form mean the persons who are identified as executive officers of Hydro One Limited and its subsidiaries, as applicable, in this annual information form. Any statements made by or on behalf of management are made in such persons’ respective capacities as executive officers of Hydro One Limited and its subsidiaries, as applicable, and not in their personal capacities. See “Directors and Officers” for more information.

This annual information form refers to certain terms commonly used in the electricity industry, such as “rate-regulated”, “rate base” and “return on equity”. Rate base is an amount that a utility is required to calculate for regulatory purposes, and refers to the net book value of the utility’s assets for regulatory purposes plus an allowance for working capital. Return on equity is a percentage that is set or approved by a utility’s regulator and represents the rate of return that a regulator allows the utility to earn on the equity component of the utility’s rate base. See also “Rate-Regulated Utilities”.

In this annual information form, all dollar amounts are expressed in Canadian dollars unless otherwise indicated. Hydro One Limited and Hydro One Inc. prepare and present their financial statements in accordance with U.S. GAAP.
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FORWARD-LOOKING INFORMATION

Certain information in this annual information form contains “forward-looking information” within the meaning of applicable Canadian securities laws. Forward-looking information in this annual information form is based on current expectations, estimates, forecasts and projections about Hydro One’s business and the industry, and the regulatory and economic environments, in which Hydro One operates and includes beliefs of and assumptions made by management. Such statements include, but are not limited to, statements related to: the Company’s transmission and distribution rate applications, and resulting decisions, rates and impacts; expectations regarding future corporate strategies; expected impacts and timing of changes to the electricity industry; expected impacts of recent changes to legislation in Ontario impacting transmitters and distributors, including the Protect Ontario by Securing Affordable Energy for Generations Act on Hydro One and its operations; the Company’s expected engagement with IESO and industry and the government decision on potential competitive procurement projects; the expected advancement and construction of various transmission stations and transmission lines in connection with the Province’s first integrated energy plan and the target in-service dates; the Company’s maturing debt; expectations regarding the Company’s financing activities; credit ratings; ongoing and planned projects and/or initiatives; expected future capital investments and expenditures, the nature and timing of these investments and expenditures, including the Company’s plans for sustaining and development capital expenditures for its distribution and transmission systems; the Company’s expected capital expenditures relating to its distribution business from 2026 to 2027; expectations related to the TSF, including consultations, reports, requirements, and implementation; expectations regarding allowed return on equity; expectations regarding the ability of the Company to recover expenditures in future rates; expectations regarding the timing and outcome of the Z-Factor application filed with the OEB; expectations regarding the ability to negotiate collective agreements consistent with rate orders; expectations related to work force demographics; the Company’s focus on health, safety and environmental management; expectations regarding taxes; expectations regarding load growth; the regional planning process; expectations related to Hydro One’s CDM requirements and targets; new legislation and regulatory initiatives relating to the electricity industry and the expected impacts of such; expectations regarding the Company’s DMS; the Company’s customer focus and related initiatives; the potential impacts of the Exposure Draft; the Company’s status as an SEC issuer; statements related to the Company’s relationships with Indigenous communities; statements related to environmental matters, and the Company’s expected future environmental, expected land assessment and remediation expenditures and the Company’s ability to recover such costs; statements related to the Company’s commitment to releasing an annual sustainability report and to improve the quality of its ESG disclosures; statements relating to the Company’s plans to issue sustainable financing instruments, such as sustainable and green bonds, and to allocate the net proceeds to investments in eligible green and social project categories; statements relating to the Company’s intention to provide annual updates regarding the use of net proceeds of any green and/or sustainable financing; cyber and data security; the Company’s relationship with the Province; future sales of shares of Hydro One Limited; expectations regarding the Company’s capital program to modernize the smart metering infrastructure and implementation through 2029; acquisitions and consolidation opportunities and other strategic initiatives; expectations regarding the Governance Agreement and other agreements with the Province; the status of litigation; expectations
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regarding the manner in which Hydro One will operate and the Company’s strategy; expectations regarding Hydro One’s dividend policy and the Company’s intention to declare and pay dividends, including the target payout ratio of 60% to 70% of net earnings; potential conflicts of interest; and legal proceedings in which Hydro One is currently involved.

Words such as “aim”, “could”, “would”, “expect”, “anticipate”, “intend”, “attempt”, “may”, “plan”, “will”, “believe”, “seek”, “estimate”, “goal”, “target”, and variations of such words and similar expressions are intended to identify such forward-looking information. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed, implied or forecasted in such forward-looking information. Hydro One does not intend, and it disclaims any obligation to update any forward-looking information, except as required by law.

The forward-looking information in this annual information form is based on a variety of factors and assumptions including, but not limited to: no unforeseen changes in the legislative and operating framework for Ontario’s electricity market; favourable decisions from the OEB and other regulatory bodies concerning outstanding and future rate and other applications; no unexpected delays in obtaining required regulatory approvals; no unforeseen changes in rate orders or rate setting methodologies for Hydro One’s distribution and transmission businesses; no unfavourable changes in environmental regulation; continued use of U.S. GAAP; a stable regulatory environment; no significant changes to the Company’s current credit ratings; no unforeseen impacts of new accounting pronouncements; no changes to expectations regarding electricity consumption; no unforeseen changes to economic and market conditions; completion of operating and capital projects that have been deferred; and no significant event occurring outside the ordinary course of business. These assumptions are based on information currently available to Hydro One, including information obtained from third-party sources. Actual results may differ materially from those predicted by such forward-looking information. While Hydro One does not know what impact any of these differences may have, Hydro One’s business, results of operations, financial condition and credit stability may be materially adversely affected if any such differences occur. Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things:

•regulatory risks and risks relating to Hydro One’s revenues, including risks relating to actual performance against forecasts, competition with other transmitters and other applications to the OEB, the rate-setting models for transmission and distribution, the recoverability of capital expenditures, obtaining rate orders or recoverability of total compensation costs;

•risks associated with the Province’s share ownership of Hydro One and other relationships with the Province, including potential conflicts of interest that may arise between Hydro One, the Province and related parties, risks associated with the Province’s exercise of further legislative and regulatory powers, risks relating to the ability of the Company to attract and retain qualified executive talent or the risk of a credit rating
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downgrade for the Company and its impact on the Company’s funding and liquidity;

•risks relating to the location of the Company’s assets on Reserve lands, that the Company’s operations and activities may give rise to the Crown’s duty to consult and potentially accommodate Indigenous communities, and the risk that Hydro One may incur significant costs associated with transferring assets located on Reserves;

•the risk that the Company may be unable to comply with regulatory and legislative requirements or that the Company may incur additional costs for compliance that are not recoverable through rates;

•the risk of exposure of the Company’s facilities to the effects of severe weather conditions, natural disasters, man-made events or other unexpected occurrences for which the Company is uninsured or for which the Company could be subject to claims for damage;

•risks associated with information system security and maintaining complex information technology and operational technology system infrastructure, including system failures or risks of cyber-attacks or unauthorized access to corporate information technology and operational technology systems;

•the risk of non-compliance with environmental regulations and inability to recover environmental expenditures in rate applications and the risk that assumptions that form the basis of the Company’s recorded environmental liabilities and related regulatory assets may change;

•the risk of labour disputes and inability to negotiate or renew appropriate collective agreements on acceptable terms consistent with the Company’s rate orders;

•the risk that the Company may not be able to execute plans for capital projects necessary to maintain the performance of the Company’s assets or to carry out projects in a timely manner or the risk of increased competition for the development of large transmission projects or legislative changes affecting the selection of transmitters;

•risks associated with asset condition, capital projects and innovation, including public opposition to or delays or denials of the requisite approvals and accommodations for the Company’s planned projects;

•risks related to the Company’s work force demographic and its potential inability to attract and retain qualified personnel;

•the risk that the Company is not able to arrange sufficient cost-effective financing to
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repay maturing debt and to fund capital expenditures, the risk of a downgrade in the Company’s credit ratings or risks associated with investor interest in ESG performance and reporting;

•risks associated with fluctuations in interest rates and failure to manage exposure to credit and financial instrument risk;

•risks associated with economic uncertainty and financial market volatility;

•the risk of failure to mitigate significant health and safety risks;

•the risk of not being able to recover the Company’s pension expenditures in future rates and uncertainty regarding the future regulatory treatment of pension, other post-employment benefits and post-retirement benefits costs;

•the impact of the ownership by the Province of lands underlying the Company’s transmission system;

•the risk associated with legal proceedings that could be costly, time-consuming or divert the attention of management and key personnel from the Company’s business operations;

•the impact if the Company does not have valid occupational rights on third-party owned or controlled lands and the risks associated with occupational rights of the Company that may be subject to expiry;

•risks relating to adverse reputational events or political actions relating to Hydro One and the electricity industry;

•the potential that Hydro One may incur significant expenses to replace functions currently outsourced if agreements are terminated or expire before a new service provider is selected;

•risks relating to acquisitions, including the failure to realize the anticipated benefits of such transactions at all, or within the time periods anticipated, and unexpected costs incurred in relation thereto;

•the inability to continue to prepare financial statements using U.S. GAAP; and

•the risk related to the impact of any new accounting pronouncements.

Hydro One cautions the reader that the above list of factors is not exhaustive. Some of these and other factors are discussed in more detail under the heading “Risk Management and Risk Factors” in the
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Annual MD&A. You should review such section in detail, including the matters referenced therein.

In addition, Hydro One cautions the reader that information provided in this annual information form regarding Hydro One’s outlook on certain matters, including potential future expenditures, is provided in order to give context to the nature of some of Hydro One’s future plans and may not be appropriate for other purposes.

ELECTRICITY INDUSTRY OVERVIEW

General Overview

The electricity industry is made up of businesses that generate, transmit, distribute and sell electricity. While traditionally a mature and stable industry, the electricity industry is facing rapid and dramatic technological change and increasing innovation. Hydro One’s business is focused on the transmission and distribution of electricity.

•Transmission refers to the delivery of electricity over high voltage lines, typically over long distances, from generating stations to local areas and large industrial customers.

•Distribution refers to the delivery of electricity over low voltage lines to end users such as homes, businesses and institutions.

Overview of an Electricity System

The basic configuration of a typical electricity system, showing electricity generation, transmission and distribution, is illustrated in the following diagram:

image1.jpg

Note:
The above image shows a typical electricity system with transmission-connected generation.

Transmission and distribution networks are sometimes referred to as the “electricity grid” or simply “the grid”.

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THE ELECTRICITY INDUSTRY IN ONTARIO

Regulation of Transmission and Distribution

General

The Electricity Act and the Ontario Energy Board Act establish the general legislative framework for Ontario’s electricity market. The activities of transmitters and distributors in Ontario are overseen by three main regulatory authorities: (i) the OEB, (ii) the IESO, and (iii) the Canada Energy Regulator. The Minister of Energy is responsible for developing integrated energy plans and has the power to issue directives to the IESO and the OEB regarding implementation of such plans.

Ontario Energy Board

The OEB is an independent regulatory agency. The Ontario Energy Board Act provides the OEB with the authority to regulate Ontario’s electricity market, including the activities of transmitters and distributors.

The OEB has the following legislated objectives in relation to the electricity industry:

•to inform consumers and protect their interests with respect to prices and the adequacy, reliability and quality of electricity service,

•to promote economic efficiency and cost effectiveness in the generation, transmission, distribution, sale and demand management of electricity and to facilitate the maintenance of a financially viable electricity industry,

•to regulate the electricity sector in a manner that supports economic growth, consistent with the policies of the Province,

•to promote electricity conservation and demand management in a manner consistent with the policies of the Province, including having regard to the consumer’s economic circumstances, and

•to facilitate innovation in the electricity sector.

The OEB is responsible for, among other things, approving transmission and distribution rates in Ontario. It also approves the construction, expansion, or reinforcement of transmission lines greater than two kilometres in length, as well as mergers, acquisitions, amalgamations and divestitures involving distributors, transmitters and other entities which it licenses. The activities of transmitters and distributors are subject to the conditions of their licences and a number of industry codes issued by the OEB. These codes and other requirements prescribe minimum standards of conduct and service for licensed participants in the electricity market.

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In January 2023, the OEB released its Framework for Energy Innovation: Setting a Path Forward for DER Integration report. This report is the culmination of the OEB’s Framework for Energy Innovation: Distributed Resources and Utility Incentives consultation and sets out the OEB’s policies and next steps with respect to the integration of distributed energy resources (“DERs”) into distribution system planning and operations, as well as the use of DERs by electricity distributors as non-wires alternatives. In April 2023, the OEB released an Energy Transition Roadmap as part of its 2023-26 Business Plan that provides a schedule of initiatives the OEB is taking or plans to undertake with respect to the energy transition. The Energy Transition Roadmap is intended to provide clarity on the OEB’s priorities, support the coordination of interrelated initiatives within the OEB and across the sector and support effective stakeholder engagement.

In June 2025, the Ministry of Energy issued a letter of direction to the OEB regarding the implementation of the Province’s Integrated Energy Plan (“IEP”), including in support of planning for growth and electrification, streamlining transmission connections and advancing the Province’s objectives relating to DERs. The OEB has since initiated a number of policy consultations in response to the letter of direction, including: Distribution Customer Connections Review, Streamlining Transmission Connections, Regional and Bulk Electricity System Planning Process Review, Review of the Valuation of Distributed Energy Resources, and Gas-Electric Co-ordination and Information Sharing. In December 2025, the OEB submitted to the Minister a Distribution System Operator roadmap for the potential development and implementation of Distribution System Operator capabilities, which is expected to inform further OEB-led Distribution System Operator consultations and working groups in 2026.

In December 2025, the Minister of Energy issued a letter of direction to the OEB, which included the Minister of Energy’s priorities and expectations for the OEB over the next three years. The initiatives identified include continuing to implement the IEP, supporting the work of the PULSE, advancing work to review the utility remuneration framework, investing in growth to improve last mile connections, and supporting distribution sector reliability, security, and resilience.

See also “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario 2017 Long-Term Energy Plan” and “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario Integrated Energy Plan”.

IESO

The IESO delivers key services across the electricity sector, including managing the power system in real time, planning for Ontario’s future energy needs, enabling conservation and designing a more efficient electricity marketplace to support sector evolution. Transmitters and other wholesale market participants must comply with the Market Rules issued by the IESO. The Market Rules require transmitters to comply with mandatory North American reliability standards for transmission issued by the NERC and the NPCC. The IESO enforces these reliability standards and coordinates with system operators and reliability agencies in other jurisdictions to ensure energy adequacy and security across the interconnected bulk electricity system in North America.
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In December 2022, the IESO released its Pathways to Decarbonization report in response to the Minister of Energy’s request to evaluate a moratorium on new natural gas generation in Ontario, and to develop an achievable pathway to decarbonization in the electricity system.

In November 2023, the IESO launched an engagement initiative on the development of a TSF. The TSF is consistent with the IESO’s Pathways to Decarbonization report that recommends building on existing actions to ensure Ontario is positioned to build the electricity generation, storage and transmission necessary to maintain a reliable, affordable and clean electricity system and power the province’s growth beyond 2030. In October 2024, following the release of the Powering Ontario’s Growth report and in response to a July 2023 letter of direction from the Minister of Energy, the IESO released updates on its engagement initiative for the TSF. The industry engagement continued in 2025 and the IESO launched the TSF registry on July 31, 2025. Hydro One continues to engage with IESO and industry and is awaiting the Province’s decision on potential projects that may be considered for competitive procurement. In January 2026, the Province announced that they are proposing the IESO launch a competitive transmission selection process to select a transmitter to build a new electricity transmission line from the Darlington Nuclear Generating Station to downtown Toronto, to help address capacity constraints in Toronto. See “Business of Hydro One – Transmission Business Segment – Competitive Conditions” for more information.

In October 2024, the IESO released a new demand forecast showing that Ontario’s electricity demand is anticipated to grow by 75% by 2050, driven by a series of factors, including growth in the industrial sector, ongoing electrification and data centres looking to connect to the grid. See also “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario 2017 Long-Term Energy Plan” and “The Electricity Industry in Ontario – Ontario Integrated Energy Plan” for more information.

In June 2025, the Ministry of Energy issued a letter of direction to the IESO regarding the implementation of the Province’s Integrated Energy Plan, including in support of planning for growth and electrification, streamlining transmission connections and advancing the Province’s objectives relating to DERs.

Canada Energy Regulator

In August 2019, the Canadian Energy Regulator Act came into force, replacing the National Energy Board Act. As a result of the new statute, the National Energy Board became the Canada Energy Regulator. Any decision or order made by the National Energy Board is considered to have been made under the Canadian Energy Regulator Act and may be enforced as such.

The Canada Energy Regulator has jurisdiction over the construction and operation of international power lines, as well as interprovincial lines that are designated as being under federal jurisdiction (of which there are currently none). As Hydro One owns and operates 11 active international power lines connecting Ontario’s transmission system with transmission systems in Michigan, Minnesota and New York, Hydro
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One holds several certificates and permits with the Canada Energy Regulator.

Transmission

Transmission companies own and operate transmission systems that deliver electricity over high voltage lines. Hydro One owns and operates a transmission system that accounts for approximately 91% of Ontario’s transmission capacity, based on the network component of the revenue requirement1 approved by the OEB.2 The Company’s transmission system is interconnected to systems in Manitoba, Michigan, Minnesota, New York and Quebec and is part of the North American electricity grid’s Eastern Interconnection. The Eastern Interconnection is a contiguous electricity transmission system that extends from Manitoba to Florida and from east of the Rocky Mountains to the North American east coast. Being part of the Eastern Interconnection provides benefits to Ontario, such as greater security and stability for Ontario’s transmission system, emergency support when there are generation constraints or shortages in Ontario, and the ability to exchange electricity with other jurisdictions.

Distribution

Distributors own and operate distribution systems that deliver electricity over power lines at voltages of 50 kV or less to end users. A local distribution company is responsible for distributing electricity to customers in its OEB-licensed service territory, and in some cases to other distributors. A service territory may cover large portions or all of a particular municipality, or an otherwise defined geographic area. Distribution customers include homes, commercial and industrial businesses and institutions such as governments, schools and hospitals.

In Ontario, as per the OEB’s annual data on electricity distributors, as at December 31, 2024, 53 local distribution companies provided electricity to approximately 5.5 million customers. The distribution industry in Ontario is fragmented, with the 10 largest local distribution companies accounting for approximately 82% of the province’s customers.

Through its wholly-owned subsidiary, Hydro One Inc., Hydro One owns the largest local distribution business in Ontario, which serves approximately 1.5 million predominantly rural customers, or approximately 27% of the total number of customers in Ontario.

1 The network component of the revenue requirement is Hydro One’s portion of the transmission revenue requirement attributed to assets that are used for the common benefit of all Hydro One and non-Hydro One customers in the province.

2    Hydro One owns and operates approximately 94% of the transmission system in Ontario based on the total OEB approved revenue requirement.
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Issues Affecting the Electricity Industry Generally

Tax Incentives

Tax incentives introduced in the 2015 Ontario budget to promote consolidation in the electricity distribution sector, reduced the tax rate for transfers of electricity assets from 33% to 22% and to nil for municipal electricity utilities with fewer than 30,000 customers. In addition, the budget introduced a capital gains exemption where capital gains arise as a result of exiting the payments in lieu of corporate taxes regime. These incentives are in place until December 31, 2028, with an additional temporary reduction of the tax rate for transfers from 22% to nil for municipal electricity utilities with 30,000 customers or more, effective from January 1, 2025 to December 31, 2028.

Ontario 2017 Long-Term Energy Plan

In October 2017, the Province released its 2017 Long-Term Energy Plan (the “2017 Long-Term Energy Plan”), which set out a number of initiatives for Ontario’s energy system. The IESO and the OEB developed implementation plans in support of the objectives of the 2017 Long-Term Energy Plan, and each implementation plan was approved by the Minister of Energy in February 2018.

In 2022, the Province established the Electrification and Energy Transition Panel (the “Electrification and Energy Transition Panel”). This panel was responsible for advising the Province on the highest value short, medium, and long-term opportunities for the energy sector to help Ontario’s economy prepare for electrification and the energy transition. The Electrification and Energy Transition Panel also identified opportunities to strengthen Ontario’s long-term energy planning process by better coordinating the fuels and the electricity sector. In 2023, the Electrification and Energy Transition Panel invited stakeholders, Indigenous partners and the public to provide written advice on five themes related to energy transition and electrification. These engagements assisted the Electrification and Energy Transition Panel in preparing its report, which was released in January 2024.

In December 2024, the Affordable Energy Act amended various statutes, providing a legislative framework to replace the Province’s long-term energy plans with integrated energy plans. See “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario Integrated Energy Plan” for more information.

Ontario Integrated Energy Plan

In January 2024, the Electrification and Energy Transition Panel, an advisory body to the Province, released its report outlining a roadmap for Ontario’s transition to a clean energy economy. In October 2024, the Province released its vision for Ontario’s energy sector, Ontario’s Affordable Energy Future, outlining key objectives to meet growing electricity demand in Ontario. This vision was intended to help guide the Province’s first integrated energy plan, among other initiatives. In December 2024, the Affordable Energy Act amended various statutes, including the Electricity Act and the Ontario Energy
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Board Act, providing a legislative framework to replace the Province’s long-term energy plans (including the 2017 Long-Term Energy Plan), with integrated energy plans. Integrated energy plans are expected to detail actions and policy steps to build an affordable, reliable and clean energy system over the long term. Whereas the focus of the long-term energy plan had been primarily on the electricity system, the integrated energy plan is intended to address all sources of energy. The amendments effected by the Affordable Energy Act also allow the Minister, subject to the approval of the Lieutenant Governor in Council, to issue directives to the IESO and OEB setting out implementation requirements relating to the integrated energy plan. From October to December 2024, the Ministry of Energy ran a consultation requesting feedback to assist the Province in developing its first plan.

The changes made by the Affordable Energy Act to the Ontario Energy Board Act, among other things, also provide the Province with the ability to make regulations specifying amendments to the Distribution System Code and the Transmission System Code in relation to certain cost allocation and cost recovery matters relating to the construction, expansion or reinforcement of distribution systems or transmission systems, or of connections to those systems. The changes made by the Affordable Energy Act also allow regulations to be made exempting persons or things from provisions of the Distribution System Code and the Transmission System Code relating to cost allocation or cost recovery, as well as alternative provisions that apply instead.

In June 2025, the Province released its first integrated energy plan, Energy for Generations (“IEP”), which aims to leverage electricity, natural gas, hydrogen, storage and other energy sources to provide Ontario with affordable, secure, reliable and clean energy to power growth and jobs across the province. The IEP establishes a planning horizon out to 2050, including the acceleration of the development of transmission infrastructure and the modernization of the distribution grid. As part of the IEP, the Province announced the advancement of several transmission projects. See “Business of Hydro One – Transmission Business Segment – Business – Hydro One Transmission Projects Under the Integrated Energy Plan” for more information.

In July 2025, the IESO announced the launch of the TSF registry. Registration enables transmitters to participate in future competitive IESO transmission procurements.

In October 2025, the Province announced the launch of the Panel for Utility Leadership and Service Excellence (“PULSE”), a strategic advisory group that will support the objectives of the IEP and provide recommendations to the Province on how to best fund and deliver the next generation of electricity infrastructure. The Panel will provide strategic advice and recommendations to the Province on how to ensure local distribution companies are positioned to meet increasing electricity demand while maintaining high standards of safety, reliability, and cost-effectiveness.

OEB Actions on Electricity Pricing

Since March 2020, the Province has taken a number of actions related to the pricing of electricity to support regulated price plan (“RPP”) customers, following the COVID-19 pandemic. These government-
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mandated actions include providing different fixed electricity prices for various periods of time. In response to direction provided by the Province, in September 2020 the OEB announced that, as of October 13, 2020, all utilities were required to give RPP customers the choice to opt out of time-of-use pricing and to elect instead to be charged on the basis of tiered (or fixed) electricity pricing.

In November 2020, the Province released its 2020 Ontario Budget: Ontario’s Action Plan: Protect, Support, Recover (the “2020 Ontario Budget”), which included a rate mitigation plan to help certain business and industrial customers. As of January 1, 2021, a portion of non-hydro renewable energy contracts (including wind, solar, bioenergy) is funded by the Province and not ratepayers. According to the 2020 Ontario Budget, this represented an approximately 25% reduction in Global Adjustment. The Global Adjustment is the difference between the guaranteed price and the money the generators earn in the wholesale marketplace. The OEB reset the RPP prices effective January 1, 2021, to reflect a decrease in the RPP supply cost as a result of the reduction in the Global Adjustment as set out in the 2020 Ontario Budget. The OEB has since reset the RPP prices in accordance with the OEB’s usual practice.

Resulting from established regulatory requirements by the Province in 2022, the OEB required distributors to implement a new voluntary ultra-low overnight price plan for RPP customers effective November 1, 2023. This represents a third pricing option for RPP customers in addition to time-of-use and tiered pricing plans. The ultra-low overnight price plan supports electrification and decarbonization by incentivizing customers to shift electricity loads to overnight periods when demand is lower and more electricity from non-emitting sources is available. In April 2023, the OEB released an addendum to their RPP Price Report that established the electricity prices under the ultra-low overnight price plan for May 1, 2023 to October 31, 2023. In September 2023, Hydro One launched the new ultra-low overnight price plan and began offering the new ultra-low overnight price plan to eligible customers. In October 2023, the OEB updated the RPP prices (including the new ultra-low overnight prices) for households and small businesses effective November 1, 2023. In October 2024, the OEB updated the RPP prices (including the new ultra-low overnight prices) for households and small businesses effective November 1, 2024. In October 2025, the OEB updated the RPP prices (including the new ultra-low overnight prices) for households and small businesses effective November 1, 2025. Going forward, it is anticipated that the OEB will periodically review the RPP prices and will reset them if required, in accordance with the OEB’s usual practice.

Building Broadband Faster Act, 2021

In March 2021, the Province introduced Bill 257, Supporting Broadband and Infrastructure Expansion Act, 2021, to create a new act entitled the Building Broadband Faster Act, 2021 that is aimed at supporting the timely deployment of broadband infrastructure within unserved and underserved rural Ontario communities. Bill 257, which received Royal Assent in 2021, amended the Ontario Energy Board Act to provide the Province with regulation-making authority regarding the development of, access to, or use of electricity infrastructure for non-electricity purposes. The Building Broadband Faster Act Guideline and three regulations informing the legislative changes were published in 2021. In March 2022, the Province introduced Bill 93, Getting Ontario Connected Act, 2022. Bill 93, which received Royal
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Assent in 2022, amended the Building Broadband Faster Act to ensure that organizations that own underground utility infrastructure near a designated high-speed internet project provide timely access to their infrastructure data, which would allow internet service providers to quickly start work on laying down underground high-speed internet infrastructure. A regulation regarding electricity infrastructure and designated broadband projects under the Ontario Energy Board Act came into force in April 2022. This regulation substantially adopted Hydro One’s proposed approach to allocation of the costs of broadband-related work on utility assets. It also directed the OEB to establish a deferral account for rate-regulated distributors to record incremental costs associated with carrying out activities pertaining to designated broadband projects, which the OEB completed in July 2022. This regulation was amended in March 2023 with respect to performance timelines associated with designated broadband projects. In September 2022, the Company launched its choice-based operating model to provide internet service providers with choices on how to access the Company’s infrastructure in order to effectively execute designated broadband projects.

In August 2023, the Building Broadband Faster Act Guideline was further amended to provide additional guidance to support the implementation of legislative and regulatory requirements, including a framework to support cost sharing for pole attachments and make-ready work.

The Company has developed and adapted an appropriate management framework that meets the government’s objectives, including arrangements to sustain the Company’s revenues and recovery of reasonable associated costs.

In October 2024, the Province announced that it had developed a program to deliver up to $400 million in subsidies to internet service providers for work associated with designated broadband projects. The program is intended to enable internet service providers to successfully and safely attach their material and equipment to the Company’s poles to bring connectivity to rural communities as part of a designated broadband project. A portion of the subsidies is expected to be used to reimburse Hydro One Networks on behalf of internet service providers for their share of enablement costs incurred to facilitate the program to date.

In November 2025, the Province amended a regulation made under the Ontario Energy Board Act, implementing a monthly capacity target of poles ready for deployment and extending the performance timelines associated with the designated broadband projects. Hydro One Networks must complete its share of the work before July 1, 2028.

Protect Ontario by Unleashing our Economy Act, 2025 and Protect Ontario by Securing Affordable Energy for Generations Act, 2025

In April 2025, the Province introduced Bill 5, the Protect Ontario by Unleashing our Economy Act, 2025, which received Royal Assent on June 5, 2025. The Protect Ontario by Unleashing our Economy Act amended various statutes to streamline the permitting and authorization process for certain projects, including major infrastructure, including through changes to the environmental permitting process in
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Ontario. The Company is assessing the potential impact on Hydro One.

In June 2025, the Province introduced Bill 40, the Protect Ontario by Securing Affordable Energy for Generations Act, 2025, which received Royal Assent on December 11, 2025. The Protect Ontario by Securing Affordable Energy for Generations Act amended various statutes, making economic development part of the mandate of the OEB, enabling the establishment of variance accounts for foreign equipment restrictions, and introducing regulation-making authority with regards to data centre connections for the provincial government. The Company is assessing the potential impact on Hydro One.

Legislative Provisions Specific to Hydro One

In addition to legislation in Ontario that impacts all transmitters and distributors, there is legislation that is specific to Hydro One. Specifically, the Electricity Act requires Hydro One’s head office and principal grid control centre to be maintained in Ontario, restricts the disposition of substantially all of its OEB-regulated transmission or distribution business, prohibits any change to its jurisdiction of incorporation, requires the Company to have an ombudsman, contains a 10% ownership restriction with respect to Voting Securities and restricts the Province from selling Voting Securities if it would own less than 40% of the Voting Securities of any class or series as a result of the sale.

Ombudsman

The Electricity Act requires the Company to have an ombudsman to act as a liaison with customers and to establish procedures for the ombudsman to inquire into and report to the Board on matters raised with the ombudsman by or on behalf of customers. See “Business of Hydro One – Ombudsman” for more information.

10% Ownership Restriction

The Electricity Act imposes share ownership restrictions on the Voting Securities. These restrictions provide that no person or company (or combination of persons or companies acting jointly or in concert) may beneficially own or exercise control or direction over more than 10% of any class or series of Voting Securities, including common shares of the Company (the “Share Ownership Restrictions”). The Share Ownership Restrictions do not apply to Voting Securities held by the Province, nor to an underwriter who holds Voting Securities solely for the purpose of distributing those securities to purchasers who comply with the Share Ownership Restrictions. The articles of Hydro One Limited provide for comprehensive enforcement mechanisms that are applicable in the event of a contravention of the Share Ownership Restrictions.

Maintenance of 40% Ownership

As of December 31, 2025, the Province owned approximately 47.1% of Hydro One Limited’s common shares. See the Annual MD&A under the heading “Risk Management and Risk Factors” for more
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information.

The Electricity Act restricts the Province from selling Voting Securities (including common shares of Hydro One Limited) if it would own less than 40% of the outstanding number of Voting Securities of that class or series after the sale. If as a result of the issuance of additional Voting Securities by Hydro One Limited, the Province owns less than 40% of the outstanding number of Voting Securities of any class or series, the Province must, subject to the approval of the Lieutenant Governor in Council and the necessary appropriations from the Legislature, take steps to acquire as many Voting Securities of that class or series as are necessary to increase the Province’s ownership to not less than 40% of the outstanding number of Voting Securities of that class or series. The manner in which, and the time by which, the Province must acquire these additional Voting Securities will be determined by the Lieutenant Governor in Council.

The Province has been granted pre-emptive rights by Hydro One Limited to assist it in meeting its ownership requirements under the Electricity Act as described under “Agreements with Principal Shareholder – Governance Agreement – Other Matters – Pre-emptive Rights”.

Elimination of Certain Legislation With Respect to Hydro One

In 2015 and 2016, Hydro One Inc. and its subsidiaries ceased to be subject to a number of Ontario statutes that apply to entities owned by the Province. Hydro One Limited is similarly not subject to those statutes. Notwithstanding the elimination of certain legislation with respect to Hydro One, the Company is required under the Financial Administration Act and the Auditor General Act to provide financial information to the Province for the Province’s public reporting purposes.

Cybersecurity

The Company is exposed to potential risks related to cyberattacks, supply chain compromises and unauthorized access to our systems. As the Company continues to make investments in and rely on additional, more complex and interconnected digital technology to enable efficient operations, the likelihood of a cyber-breach impacting our business increases. In addition, the critical nature of our business further increases the likelihood of a sophisticated cyber attacker taking advantage of our people, processes and technology. The Company takes a risk-aligned approach to cyber related investments to reduce the likelihood of an impactful cyber related breach. Despite having strong security measures in place, a breach could occur. A breach has the ability to corrupt our information technology systems, compromise our sensitive information, effect the integrity of our financial controls, disrupt operations or have impacts to the safety of our work environment. The Company manages these risks by establishing a common set of cybersecurity standards, periodic security testing, program maturity objectives, security partnerships and a unified security strategy built on a set of cybersecurity standards driven by the OEB. This Ontario specific set of standards is in alignment with the National Institute of Standards and Technology’s Cyber Security Framework. In addition to provincial regulatory requirements of the OEB, critical systems that support the North American Bulk Electric System are regulated by the North American Electric Reliability Critical Infrastructure Protection Standards. These two foundational
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frameworks establish strong security measures across all aspects of our operations.

Exemptive Relief

Disclosure of Ownership by the Province

In July 2022, the Canadian securities regulatory authorities granted (i) the Minister of Energy; (ii) Ontario Power Generation Inc. (on behalf of itself and the segregated funds established as required by the Nuclear Fuel Waste Act); and (iii) agencies of the Crown, provincial Crown corporations and other provincial entities (collectively, the “Non-Aggregated Holders”) exemptive relief, subject to certain conditions, to enable each Non-Aggregated Holder to treat securities of Hydro One Limited and debt securities of Hydro One Inc. and HOHL that it owns or controls separately from securities of Hydro One Limited and debt securities of Hydro One Inc. and HOHL owned or controlled by the other Non-Aggregated Holders for purposes of certain take-over bid, early warning reporting, insider reporting and control person distribution rules and certain distribution restrictions under Canadian securities laws. Hydro One Limited was also granted relief permitting it to rely solely on insider reports and early warning reports filed by Non-Aggregated Holders when reporting beneficial ownership or control or direction over securities of Hydro One Limited and debt securities of Hydro One Inc. and HOHL in any information circular or annual information form in respect of such securities beneficially owned or controlled by any Non-Aggregated Holder, subject to certain conditions. This exemptive relief will remain in effect until the earliest to occur of the following: (i) July 28, 2027, and (ii) the date that the Non-Aggregated Holders becomes subject to disclosure requirements that are substantially similar to the disclosure requirements regarding beneficial ownership or control over securities of Hydro One Limited or debt securities of Hydro One Inc. or HOHL for which such exemption was granted and such disclosure requirements require the aggregation of holdings by the Minister of Energy with other Non-Aggregated Holders. Substantially similar relief had previously been granted in June 2017, which terminated in 2022.

U.S. GAAP

In October 2022, Hydro One Limited was granted exemptive relief by the securities regulators in each province and territory of Canada that allows Hydro One Limited to continue to report its financial results in accordance with U.S. GAAP (the “Exemptive Relief”). The Exemptive Relief will remain in effect until the earliest to occur of the following: (i) January 1, 2027; (ii) if Hydro One Limited ceases to have rate-regulated activities, the first day of Hydro One Limited’s financial year that commences after it ceases to have such rate-regulated activities; and (iii) the first day of Hydro One Limited’s financial year that commences on or following the later of: (a) the effective date prescribed by the IASB for the mandatory application of a standard within International Financial Reporting Standards specific to entities with rate-regulated activities (the “Mandatory Rate-regulated Standard”); and (b) two years after the IASB publishes the final version of a Mandatory Rate-regulated Standard. In January 2021, the IASB published Exposure Draft – Regulatory Assets and Liabilities (the “Exposure Draft”). In July 2024, following completion of the re-deliberations of the proposals in the Exposure Draft, the IASB indicated that it expects to publish the new standard in the second half of 2025. The IASB tentatively decided to
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require an entity to apply the prospective Mandatory Rate-regulated Standard for annual periods beginning on or after January 1, 2029, with earlier application permitted. In October 2025, the IASB updated its timing expectation for the issuance of the new standard to the second quarter of 2026. The Company continues to monitor the developments related to the anticipated new standard and determine the potential impacts to the Company’s financial statements.

Hydro One Limited is also permitted to report its financial results in accordance with U.S. GAAP by virtue of being, and for so long as it remains, an “SEC issuer” (within the meaning of National Instrument 52-107 – Acceptable Accounting Principles and Auditing Standards). There can be no assurance that Hydro One Limited will remain an SEC issuer indefinitely.

RECENT DEVELOPMENTS AT HYDRO ONE

Collective Bargaining

On January 13, 2026, Hydro One Inc. and the Society announced that a tentative agreement had been reached. On January 30, 2026, the agreement was ratified by the Society-represented employees, covering the period from October 1, 2025, to March 31, 2028.

RATE-REGULATED UTILITIES

Rate Applications in Ontario

Framework

The term “rate-regulated” is used to refer to an electricity business whose rates for transmission, distribution and other services are subject to approval by a regulator. The rate base of a rate-regulated utility means the net book value of the regulated assets of the utility, plus an allowance for working capital. The OEB is the regulator that approves electricity transmission and distribution rates in Ontario. Transmission and distribution rates have historically been determined using either a cost-of-service model or a performance-based model, which typically includes a cost-of-service base year. The OEB’s rate-setting models and cost of capital policy are reviewed and modified by the OEB from time to time. The OEB recently launched a consultation to update the rate-setting framework, in response to a changing energy and policy landscape.

In a cost-of-service model, a utility charges rates for its services that allow it to recover the costs of providing its services and earn an allowed return on equity. A utility’s return on equity, or “ROE”, is the rate of return that a regulator allows the utility to earn on the equity portion of the utility’s rate base. The utility’s costs of providing its services must be prudently incurred. Cost savings are typically passed on to customers in the form of lower rates reflected in future rate decisions.

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Cost of Service ($)
+Return on Equity ($)=
Revenue Requirement ($)

In a performance-based model, a utility also charges rates for its services that allow it to recover the costs of providing its services and earn an allowed return on equity. However, rates are adjusted formulaically in years subsequent to the initial rebasing of costs. The formulaic adjustments in a performance-based model consider inflation and expectations regarding productivity. They assume that the utility becomes increasingly efficient over time. If a utility achieves cost savings in excess of those established by the regulator, the utility may retain some or all of the benefits of those cost savings, which may permit the utility to earn more than its allowed return on equity. In Ontario, transmission and distribution rates, including those of Hydro One, are now generally determined using a performance-based model.

In 2024, the OEB commenced a generic proceeding to review and potentially revise the methodology for determining the cost of capital parameters and deemed capital structure for rate-regulated utilities in Ontario. In March 2025, the OEB issued a decision, revising the methodology for determining the values of the cost of capital parameters. These parameters are updated annually and are expected to be applied at a utility’s next rebasing application. The OEB’s approach for deemed capital structure remained unchanged at 40% equity and 60% debt, and provided utilities with the option to file evidence to support changes due to their specific circumstances in future rate applications.

CORPORATE STRUCTURE

Incorporation and Office

Hydro One Limited was incorporated on August 31, 2015, under the OBCA. Its registered office and head office is located at 483 Bay Street, 8th Floor, South Tower, Toronto, Ontario M5G 2P5.

On October 30, 2015, the articles of Hydro One Limited were amended to authorize the creation of an unlimited number of Series 1 preferred shares and an unlimited number of Series 2 preferred shares, with the Series 1 preferred shares to be issued to the Province.

On October 31, 2015, all of the issued and outstanding shares of Hydro One Inc. were acquired by Hydro One Limited from the Province in exchange for the issuance to the Province of common shares and Series 1 preferred shares of Hydro One Limited. All of the Series 1 preferred shares were subsequently redeemed by Hydro One Limited on November 20, 2020, such that there are currently no Series 1 preferred shares issued and outstanding.

On November 4, 2015, the articles of Hydro One Limited were amended to authorize the consolidation of its outstanding common shares such that 595,000,000 common shares of Hydro One Limited were issued and outstanding.

On June 24, 2025, the articles of Hydro One Limited were amended to change the minimum and
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maximum number of directors, providing for a minimum of eight directors and a maximum of 15 directors.

Corporate Structure and Subsidiaries

The following is a simplified chart showing the organizational structure of Hydro One and the name and jurisdiction of incorporation of certain of its subsidiaries. This chart does not include all legal entities within Hydro One’s organizational structure. Hydro One Limited owns, directly or indirectly, 100% of the voting securities of all of the subsidiaries listed below.

image2.jpg

Notes:
(1)As of December 31, 2025, the Province directly owned approximately 47.1% of Hydro One Limited’s outstanding common shares.
(2)Indirectly held through a wholly-owned subsidiary of Hydro One Limited that acts as a holding company for Hydro One’s non-rate-regulated businesses.
(3)Indirectly held through a wholly-owned subsidiary of Hydro One Limited.

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Certain of Hydro One’s subsidiaries are described below:

•Hydro One Inc. – acts as a holding company for Hydro One’s rate-regulated businesses. Its publicly-issued debt continues to be outstanding.

•Hydro One Networks – the principal operating subsidiary that carries on Hydro One’s rate-regulated transmission and distribution businesses.

•Hydro One Remote Communities – generates and supplies electricity to remote communities in northern Ontario.

•Acronym Solutions Inc. – carries on Hydro One’s non-rate-regulated telecommunications business.

•Hydro One Holdings Limited – a finance subsidiary with no operational activities.

GENERAL DEVELOPMENT OF THE BUSINESS

Chronological Development of the Business

Background

In August 2015, Hydro One Limited was incorporated by the Province as its sole shareholder. In November 2015, Hydro One Limited completed its initial public offering on the TSX by way of a secondary offering of common shares by the Province. Hydro One Limited did not receive any proceeds from the initial public offering. Prior to the closing of the initial public offering, all of the issued and outstanding common shares of Hydro One Inc. were acquired by Hydro One Limited.

2023

Directors

Effective June 2, 2023, Mitch Panciuk, Helga Reidel, and Brian Vaasjo were elected directors of Hydro One Limited and Hydro One Inc. at Hydro One Limited’s annual meeting of shareholders. The new directors replaced William Sheffield, Blair Cowper-Smith, and Russel Robertson who did not stand for re-election.

Executive Officers

Effective February 1, 2023, William Sheffield resigned as Interim President and Chief Executive Officer of Hydro One Limited and Hydro One Inc.

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Effective February 1, 2023, David Lebeter was appointed as President and Chief Executive Officer of Hydro One Limited and Hydro One Inc.

Effective April 13, 2023, David Lebeter resigned as Chief Operating Officer.

Effective April 13, 2023, Teri French was appointed as Executive Vice President, Operations and Customer Experience. Teri French’s current title is Executive Vice President, Safety, Operations and Customer Experience.

Effective April 13, 2023, Andrew Spencer was appointed as Executive Vice President, Capital Portfolio Delivery.

Effective April 13, 2023, Paul Harricks resigned as Executive Vice President, Chief Legal Officer.

Effective April 13, 2023, Megan Telford’s title was expanded to Executive Vice President, Strategy, Energy Transition and Human Resources.

Effective April 13, 2023, Chris Lopez’s title was expanded to Executive Vice President, Chief Financial and Regulatory Officer.

2023 Sustainable Financing Framework

In January 2023, Hydro One Limited announced the publication of its Sustainable Financing Framework dated January 23, 2023 (the “2023 Framework”), a first for a utility in Canada. The 2023 Framework allows Hydro One Limited and its subsidiaries (including Hydro One Inc.) to issue sustainable financing instruments, such as sustainable and green bonds, and allocate the net proceeds to investments in eligible green and social project categories. Under the 2023 Framework, Hydro One Limited committed to providing an annual verification regarding the allocation of net proceeds of any green and/or sustainable financing, until the net proceeds of any such financing are fully allocated to eligible projects identified under the 2023 Framework. The 2023 Framework has been reviewed by Sustainalytics, which issued a second party opinion confirming that the 2023 Framework aligns with the International Capital Markets Association (“ICMA”) Sustainability Bond Guidelines 2021, Green Bond Principles 2021, the Social Bond Principles 2021 and the Loan Syndications and Trading Association (“LSTA”) Green and Social Loan Principles 2021. The 2023 Framework continues to apply in respect of certain sustainable financing instruments that were issued by Hydro One Limited or its subsidiaries prior to August 13, 2024.

See also “General Development of the Business – Chronological Development of the Business – 2024 – 2024 Sustainable Financing Framework”.

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COVID-19

In 2023, the World Health Organization declared the end to COVID-19 as a public health emergency, which was originally declared a global pandemic in 2020. During the pandemic, the Company had continued to operate in-line with evolving safety procedures and practices.

2024

Executive Officers

Effective March 25, 2024, Renée McKenzie became Executive Vice President, Digital and Technology Solutions.

Effective June 9, 2024, Chris Lopez resigned as Executive Vice President and Chief Financial and Regulatory Officer.

Effective June 10, 2024, Harry Taylor was appointed as Executive Vice President and Chief Financial and Regulatory Officer.

Effective December 12, 2024, Andrew Spencer resigned as Executive Vice President, Capital Portfolio Delivery.

On December 12, 2024, Ryan Docherty, Vice President, Engineering and Construction Services, assumed responsibility on an interim basis for overseeing Capital Portfolio Delivery. Effective January 30, 2025, Mr. Docherty became Acting Head, Capital Portfolio Delivery.

2024 Sustainable Financing Framework

Hydro One Inc. has published allocation reports dated January 24, 2024, August 13, 2024, and May 16, 2025.

In August 2024, Hydro One Limited updated and published a new Sustainable Financing Framework (the “2024 Framework”). The 2024 Framework has been reviewed by Sustainalytics, which issued a second party opinion confirming that the 2024 Framework aligns with the ICMA Sustainability Bond Guidelines 2021, Green Bond Principles 2021, the Social Bond Principles 2023 and the LSTA Green and Social Loan Principles 2023.

The 2024 Framework allows Hydro One Limited and its subsidiaries (including Hydro One Inc.) to issue sustainable financing instruments, such as sustainability and green bonds, and allocate the net proceeds to investments in eligible green and social project categories. The project categories include: clean energy, energy efficiency, clean transportation, biodiversity conservation, climate change adaptation, socio-economic advancement of Indigenous peoples and access to essential services (such as the electrical grid
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and enablement of high-speed broadband internet). Under the 2024 Framework, Hydro One Limited has committed to providing an annual verification regarding the allocation of net proceeds of any green and/or sustainable financing, until the net proceeds of any such financing are fully allocated to eligible projects identified under the 2024 Framework.

See also “General Development of the Business – Chronological Development of the Business – 2023 – 2023 Sustainable Financing Framework”.

2024 HOI MTN Shelf Prospectus

On February 28, 2024, Hydro One Inc. filed a short form base shelf prospectus in each of the provinces of Canada qualifying the issuance of medium term notes of Hydro One Inc. from time to time during the 25-month period ending March 29, 2026 (the “2024 HOI MTN Shelf Prospectus”). The 2024 HOI MTN Shelf Prospectus replaced the short form base shelf prospectus of Hydro One Inc. that was filed in 2022 and expired in July 2024. To date, Hydro One Inc. has issued an aggregate $4,650 million medium term notes pursuant to the 2024 HOI MTN Shelf Prospectus.

2024 HOL Universal Base Shelf Prospectus

In August 2024, Hydro One Limited filed a universal short form base shelf prospectus in Canada (the “2024 HOL Shelf Prospectus”) to replace the short form base shelf prospectus of Hydro One Limited that was filed in 2022 and expired in September 2024. The 2024 HOL Shelf Prospectus allows Hydro One Limited to offer, from time to time in one or more public offerings, debt, equity or other securities, or any combination thereof, during the 25-month period ending September 20, 2026. To date, no securities have been issued under the 2024 HOL Shelf Prospectus.

2024 HOHL U.S. Debt Shelf Prospectus

In November 2024, HOHL filed a U.S. debt short form base shelf prospectus (the “2024 HOHL U.S. Debt Prospectus”) with the securities regulatory authorities in Ontario and the United States, to replace the U.S. debt short form base shelf prospectus of HOHL that was filed in 2022 and expired in December 2024. The filing of the 2024 HOHL U.S. Debt Prospectus is intended to facilitate and preserve flexibility for the Company’s funding strategies. The 2024 HOHL U.S. Debt Prospectus allows HOHL to offer, from time to time in one or more public offerings, up to U.S.$3.0 billion of debt securities (which may be senior, or subordinated or junior subordinated indebtedness), unconditionally guaranteed by Hydro One Limited, during the 25-month period ending December 29, 2026. To date, no debt securities have been issued under the 2024 HOHL U.S. Debt Prospectus.

East-West Tie Limited Partnership

In December 2024, Hydro One Networks entered into an agreement to purchase an approximately 48% interest in the East-West Tie Limited Partnership from affiliates of OMERS Infrastructure Management
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Inc. and Enbridge Transmission Holdings Inc. The East-West Tie Limited Partnership owns the East-West Tie Line, a 450-kilometre, 230 kV double-circuit transmission line spanning from Wawa to Thunder Bay, along the north shore of Lake Superior. The transaction closed on March 4, 2025. See “General Development of the Business – Chronological Development of the Business – 2025 – East-West Tie Limited Partnership”.

2025

Directors

Effective March 24, 2025, Timothy Hodgson, then chair of the boards of directors of Hydro One Limited and Hydro One Inc., commenced an unpaid leave of absence to pursue candidacy in the federal election. Effective March 24, 2025, Susan Wolburgh Jenah was appointed as Interim Chair of the boards of directors of Hydro One Limited and Hydro One Inc.

Effective April 28, 2025, Timothy Hodgson resigned as a director and as chair of the boards of directors of Hydro One Limited and Hydro One Inc.

Effective June 4, 2025, Melissa Sonberg was appointed as Chair of the boards of directors of Hydro One Limited and Hydro One Inc.

Director Cherie Brant did not stand for re-election at the Annual and Special Meeting of Shareholders on June 24, 2025.

Effective August 14, 2025, Michael Rencheck was elected as a director of Hydro One Limited and Hydro One Inc.

Executive Officers

Effective February 18, 2025, Gillian Whitebread joined Hydro One as Executive Vice President, Head of Human Resources.

Effective February 18, 2025, Megan Telford’s title became Executive Vice President, Strategy and Energy Transition. Effective July 21, 2025, Megan Telford became Chief Operating Officer.

Effective July 21, 2025, Lisa Pearson was appointed as Executive Vice President, Corporate Affairs.

Effective August 25, 2025, David Lebeter commenced a temporary compassionate care leave. Effective August 25, 2025, Harry Taylor was appointed as Interim President and CEO and also continued to serve as Executive Vice President, Chief Financial and Regulatory Officer. Effective November 12, 2025, Mr. Lebeter returned from leave.

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East-West Tie Limited Partnership

On March 4, 2025, Hydro One Networks completed the acquisition of an approximately 48% minority interest in the East-West Tie Limited Partnership for approximately $261 million in cash, including closing adjustments. See also “General Development of the Business – Chronological Development of the Business – 2024 – East-West Tie Limited Partnership”.

2025 HOI U.S. Debt Shelf Prospectus

In August 2025, Hydro One Inc. filed a U.S. debt short form base shelf prospectus (the “2025 HOI U.S. Debt Prospectus”) with the securities regulatory authorities in Ontario and the United States. The filing of the 2025 HOI U.S. Debt Prospectus is intended to facilitate and broaden flexibility for the Company’s funding strategies. The 2025 HOI U.S. Debt Prospectus allows Hydro One Inc. to offer U.S. debt securities, from time to time in one or more public offerings, during the 25-month period ending September 18, 2027. To date, no debt securities have been issued under the 2025 HOI U.S. Debt Prospectus.

General Development of the Business

In addition to the chronological development of the business, the following general developments in the business have occurred and continue to be relevant.

Customer Focus

Hydro One’s continued focus on customer service remains a critical aspect of its success as a company. Greater corporate accountability for performance outcomes, and company-wide improvements in productivity and efficiency, align with customers’ expectations of how Hydro One should operate. Hydro One intends to continue to deliver affordable solutions and reliable electricity, advocate for its customers and empower them to make informed decisions about their energy usage and respond to emerging customer needs.

Customer Service

Hydro One is committed to delivering value to its customers by understanding customers’ current and future needs and expectations so that the Company can continuously improve its service. This includes specific, measurable commitments that encompass all areas of service. In 2025, compared with 2024, residential and small business customer satisfaction scores remained unchanged at 88%, transmission customer satisfaction decreased from 85% to 79%, and commercial and industrial satisfaction decreased from 85% to 82%.

Hydro One is on a multi-year journey to transform the customer experience by continuing to invest in technology such as interaction analytics, home energy insights, and automated performance scorecards for
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customer service representatives.

Review of Operations

Hydro One is committed to providing value to its customers and shareholders by identifying and acting on opportunities to become the safest and most efficient utility. Hydro One has been focused on the identification of opportunities for improved corporate performance and the development of strategies to drive safer, more efficient and cost-effective operations. Hydro One conducts regular reviews of key corporate activities and programs, covering areas such as construction services and project management practices, asset deployment and controls, asset planning, information technology and cybersecurity, vegetation management practices, fleet services and utilization, supply chain management and business continuity planning. The Company has and continues to observe and implement operational and cost improvements across work planning and execution.

Strategy

In November 2024, Hydro One launched its refreshed corporate strategy. The strategic priorities are focused on building a better and brighter future for all by enriching customers’ experience, enhancing the value of the grid, delivering new solutions and fostering partnerships.

Details of the strategic priorities are as follows:

•Enrich our customers’ experience
We deliver easy and exceptional customer experiences. We understand and solve our customers’ evolving needs. We empower our customers to make informed decisions.

•Enhance grid value needed for sustainable economic growth
We optimize grid assets to create financial value. We acknowledge our Indigenous partners as core to our growth. We deliver sustainable growth by seizing regulated and unregulated opportunities.

•Create new solutions for an electrified future
We use advanced analytics and digital capabilities to manage an electrified future. We collaborate and foster innovation. We actively position ourselves as an enabler of the energy transition.

•Win with partners
We collaborate with partners to deliver high value results. We create mutually beneficial solutions. We are part of a coalition that shapes our net-zero future.

Sustainability Report

In May 2025, Hydro One Limited published its 2024 Sustainability Report, highlighting its ESG
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performance in 2024. The Sustainability Report provides stakeholders, partners, customers, and communities, including Indigenous communities, with a better understanding of how Hydro One manages the opportunities and challenges associated with its business. Hydro One intends to continue to release an annual sustainability report and to continue to improve the quality of its ESG disclosures. The Company’s annual sustainability reporting is aligned with the Sustainability Accounting Standards Board, the Global Reporting Initiative Standards and the United Nations Sustainable Development Goals, and prepared broadly following the recommendations of the Task Force on Climate-related Financial Disclosures.

BUSINESS OF HYDRO ONE

Segments

Through its wholly-owned subsidiary Hydro One Inc., Hydro One is Ontario’s largest electricity transmission and distribution utility with approximately $40 billion in assets and 2025 revenues of approximately $9 billion. Hydro One owns and operates substantially all of Ontario’s electricity transmission network and is the largest electricity distributor in Ontario by number of customers. The Company’s regulated transmission and distribution operations are owned by subsidiaries of Hydro One Inc. Hydro One delivers electricity safely and reliably to approximately 1.5 million customers across the province of Ontario, and to large industrial customers and municipal utilities. Through its subsidiaries, Hydro One Inc. owns and operates approximately 30,000 circuit kilometres of high-voltage transmission lines and approximately 126,000 circuit kilometres of primary low-voltage distribution lines.

Hydro One has three segments: (i) transmission business; (ii) distribution business; and (iii) other. Each of the three segments is described below.

Hydro One’s transmission and distribution businesses are both operated primarily by Hydro One Networks. This allows both businesses to utilize common operating platforms, technology, work processes, equipment and field staff and thereby take advantage of operating efficiencies and synergies. For regulatory purposes, Hydro One Networks has historically filed separate rate applications with the OEB for each of its licensed transmission and distribution businesses. In 2021, a single application was filed for the Hydro One Networks transmission and distribution businesses for the period 2023 to 2027, which was approved by the OEB in November 2022. See “Transmission Business Segment – Regulation – Transmission Rate Setting” for more information.

Transmission Business Segment

Overview

Hydro One’s transmission business consists of owning and operating Hydro One’s transmission system, which accounts for approximately 91% of Ontario’s transmission capacity based on the network
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component of the revenue requirement3 approved by the OEB.4 All of the Company’s transmission business is carried out by subsidiaries of Hydro One Inc., including through Hydro One Networks and HOSSM, as well as through the Company’s approximately 66% interest in B2M LP, approximately 55% interest in NRLP, and approximately 50% interest in CLLP5. The transmission segment also includes Hydro One Networks’ approximate 48% minority interest in the East-West Tie Limited Partnership. Hydro One’s transmission business represented approximately 60% of its total assets as at December 31, 2025, and accounted for approximately 53% of its total revenues, net of purchased power6 in 2025 and approximately 27% of its total revenues in 2025, and approximately 52% of its total revenues, net of purchased power in 2024 and approximately 27% of its total revenues in 2024.

The Company’s transmission business is a rate-regulated business that earns revenues mainly from transmission rates that are subject to approval by the OEB. Transmission rates are generally determined using a performance-based model, which typically includes a cost-of-service base year. Transmission rates are administered and collected by the IESO and are remitted by the IESO to Hydro One on a monthly basis, which means that Hydro One’s transmission business has no direct exposure to end-customer counterparty risk.

Transmission rates are based on monthly peak electricity demand across Ontario’s transmission network. This gives rise to seasonal variations in Hydro One’s transmission revenues, which are generally higher in the summer and winter due to increased demand, and lower during other periods of reduced demand. Hydro One’s transmission revenues also include revenues associated with exporting energy to markets outside of Ontario. Ancillary revenue includes revenues from providing maintenance services to generators and from third-party land use.

Business

The Company’s transmission system serves substantially all of Ontario and transported approximately 146 TWh of energy throughout the province in 2025. Hydro One Networks’ transmission customers consist of 34 local distribution companies (including Hydro One’s own distribution business) and 88 large industrial customers connected directly to the transmission network, including automotive,
3 The network component of the revenue requirement is Hydro One’s portion of the transmission revenue requirement attributed to assets that are used for the common benefit of all Hydro One and non-Hydro One customers in the province.

4    Hydro One owns and operates approximately 94% of the transmission system in Ontario based on the total OEB approved revenue requirement.
5 Through Hydro One’s First Nation equity partnership model, as of February 2, 2026, all five First Nation partners have collectively invested in an approximately 50% equity stake in the transmission line component of the project.

6    Revenues, net of purchased power is a non-GAAP financial measure. Non-GAAP financial measures do not have a standardized meaning under U.S. GAAP, which is used to prepare the Company’s financial statements, and accordingly, these measures may not be comparable to similar measures used by other companies. Additional disclosure for this non-GAAP financial measure is incorporated by reference herein and can be found in the section titled “Non-GAAP Measures” of the Annual MD&A available on SEDAR+ under Hydro One Limited’s profile at www.sedarplus.com.
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manufacturing, chemical and natural resources businesses. Electricity delivered over Hydro One Networks’ transmission network is supplied by 139 generators in Ontario and electricity imported into the province through interties. Interties are transmission interconnections between neighbouring electric systems that allow power to be imported and exported.

The high voltage power lines in Hydro One’s transmission network are categorized as either lines which form part of the “bulk electricity system” or “area supply lines”. Power lines which form part of the bulk electricity system typically connect major generation facilities with transmission stations and often cover long distances, while area supply lines serve a local region. Ontario’s transmission system is connected to the transmission systems of Manitoba, Michigan, Minnesota, New York and Quebec through the use of interties, allowing for the import and export of electricity to and from Ontario.

Hydro One’s transmission assets were approximately $24 billion as at December 31, 2025 and include transmission stations, transmission lines, a control centre and telecommunications facilities. Hydro One has approximately 312 in-service transmission stations and approximately 30,000 circuit kilometres of high voltage lines whose major components include cables, conductors and wood or steel support structures. All of these lines are overhead power lines except for approximately 280 circuit kilometres of underground cables located in primarily urban areas.

Hydro One’s transmission network is managed from a central location. This centre monitors and controls the Company’s entire transmission network and has the capability to remotely monitor and operate transmission equipment, respond to alarms and contingencies and restore and reroute interrupted power. There is also a backup facility which would be staffed in the event of an evacuation of the centre. In 2022, Hydro One’s new primary control centre became fully operational.

Hydro One uses telecommunications systems for the protection and operation of its transmission and distribution networks. These systems are subject to very stringent reliability and security requirements, which help the Company meet its reliability obligations and facilitate the restoration of power following service interruptions.

B2M LP is Hydro One’s partnership with the Saugeen Ojibway Nation with respect to the Bruce-to-Milton transmission line. B2M LP owns the transmission line assets relating to two circuits between Bruce Transmission Station and Milton Switching Station. Hydro One Networks owns the stations where the lines terminate. Hydro One maintains and operates the Bruce-to-Milton line and has an approximately 66% economic interest in the partnership. See “Business of Hydro One – Transmission Business Segment – Regulation – Recent Transmission Rate Applications – B2M Limited Partnership” for more information.

NRLP is Hydro One’s partnership with Six Nations of the Grand River Development Corporation and, through a trust, the Mississaugas of the Credit First Nation. NRLP owns the Niagara Line. Hydro One maintains and operates the Niagara Line, and has an approximately 55% interest in the partnership. See “Business of Hydro One – Transmission Business Segment – Regulation – Recent Transmission Rate
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Applications – Niagara Reinforcement Limited Partnership” for more information.

CLLP was formed to own and operate a double circuit 230 kV transmission line from the Chatham Switching Station to the Lakeshore TS. Hydro One maintains and operates the CLLP line, and currently owns an approximately 50% interest in the partnership. Through Hydro One’s First Nation equity partnership model, as of February 2, 2026, all five First Nation partners have collectively invested in an approximately 50% equity stake in the transmission line component of the project. See “Business of Hydro One – Transmission Business Segment – Regulation – Recent Transmission Rate Applications – Chatham x Lakeshore Limited Partnership” for more information.

First Nation Equity Partnership Model

Through Hydro One’s First Nation equity partnership model, First Nations have the opportunity to invest in a 50% equity stake in the transmission line component of all new large-scale capital transmission line projects with a value exceeding $100 million. Hydro One has more than ten transmission lines under development or that have been developed under the First Nation equity partnership model. See “Business of Hydro One – Indigenous Communities”.

Hydro One Transmission Projects Under the Integrated Energy Plan

As part of the IEP, the Province announced the advancement of several new transmission projects. In November 2025, the Minister of Energy directed the OEB to amend Hydro One Networks’ transmission licence to develop and construct the Bowmanville to Parkway Transmission Line, a proposed new double-circuit 500 kV transmission line from the Bowmanville Switching Station to one of Parkway TS, Claireville TS, or Cherrywood TS, including associated station facility expansions or upgrades required at terminal stations. The line is targeting an in-service date in the early-2030s. In addition, the Province designated as priority the Bowmanville to Parkway Transmission Line, the Orangeville to Barrie Reconductoring Project, and the Windsor to Lakeshore Transmission Line. The Orangeville to Barrie Reconductoring Project involves the reconductoring of Hydro One’s existing 230 kV transmission lines between Orangeville TS and Essa TS, with a target in-service date of 2027. The Orangeville to Barrie Reconductoring Project does not require designation because this project relates to existing Hydro One Networks’ transmission infrastructure. The Windsor to Lakeshore Transmission Line is a 230 kV transmission line from Lauzon TS to Lakeshore TS with a target in-service date of 2032. In January 2026, the Minister of Energy directed the OEB to amend Hydro One Networks’ transmission licence to develop and construct the Greenstone Transmission Line, a proposed new 230 kV transmission line between the East-West Tie and Longlac TS and extending to or near Aroland First Nation, terminating at a new switching station and associated station facilities. In addition, the Province designated the Greenstone Transmission Line as a priority. The line has a target in-service date of 2032. In February 2026, the Minister of Energy directed the OEB to amend Hydro One Networks’ transmission licence to develop and seek approvals for the Sudbury to Barrie Transmission Line, a new single circuit 500 kV transmission line between Essa TS and Hanmer TS, including associated station facilities. In addition, the Province designated the Sudbury to Barrie Transmission Line as a priority. The line has a target in-service date of
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2032. The designation of this project includes the direction for a second Sudbury to Barrie Transmission Line, a second new single circuit 500 kV transmission line from Essa TS to Hanmer TS, including associated station facilities. A recommended in-service date for the second Sudbury to Barrie Transmission Line will be determined by the IESO. The Minister of Energy had previously, in March 2022, directed the OEB to amend Hydro One Networks’ licence to require it to develop and seek approvals for the Windsor to Lakeshore Transmission Line.

The IEP also addressed the need for additional transmission capacity in the Red Lake area in northwestern Ontario. In August 2025, the IESO released the Northwest Region Integrated Regional Resource Plan Addendum (“Addendum”). The Addendum recommends the urgent development of the Red Lake Transmission Line, a one double-circuit 230 kV transmission line that would run from Dryden TS to Ear Falls TS, and another double-circuit 230 kV transmission line that would run from Ear Falls TS to Red Lake Switching Station, along with associated station facilities, to meet anticipated 2028 capacity needs. Hydro One will work with the IESO to determine an appropriate in-service date for the project. In October 2025, the Ministry of Energy announced a proposal to bring forward an Order in Council (to be recommended by the Minister of Energy) to declare the project as priority and issue a companion directive, that would, if approved, direct the OEB to amend Hydro One Networks’ transmitter licence to require it to undertake development work and seek all necessary approvals to construct the project. The consultation period for the proposal closed on December 13, 2025.

Regulation

Transmission Rate Setting

The OEB provides two revenue plan options for transmission rates in Ontario: the Custom Incentive Rate Setting Plan (the “Custom IR Method”) and the Incentive-Based Revenue Index Rate Setting Plan (the “Revenue Cap Index”).

Under the Revenue Cap Index, the first year’s revenue requirement reflects the transmitter’s cost of service; and annually thereafter, this amount is subject to a formulaic increase reflecting inflation, partially offset by a productivity factor. The revenue requirement in these subsequent years is set on the assumption that the transmitter will achieve efficiency or productivity improvements to offset the productivity factor imposed by the regulator. Under the Custom IR Method, a similar methodology to the Revenue Cap Index may be used; however, applications are multi-year and are designed to reflect a transmitter-specific revenue trend for the application term. For example, a transmitter may request incremental capital funding beyond amounts established in the base year revenue requirement.

The OEB sets transmission rates based on a two-step process. First, all transmitters apply to the OEB for approval of their revenue requirements. Second, the OEB aggregates the total revenue requirements of all transmitters in Ontario and applies a formula to arrive at a single set of rates that are charged to ratepayers for the three types of transmission services applicable in Ontario, namely: network services, line connection services and transformation connection services. The three separate rates charged for these
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services are the same for all transmitters and are referred to as “uniform transmission rates”. Uniform transmission rates for all transmitters are set by the OEB on an annual basis, using the revenue requirements set out in the most recent rate decision issued for each transmitter.

The filing requirements for transmitters mandate the integration of core RRF (defined below under “Business of Hydro One – Distribution Business Segment – Regulation – Distribution Rates”) concepts into revenue requirement applications. Transmitters applying for revenue requirements under the Custom IR Method or Revenue Cap Index must include: (i) evidence of the continuous improvement and efficiency gains anticipated to be achieved over the rate term; (ii) a mechanism to protect ratepayers in the event of earnings significantly in excess of the regulatory net income supported by the return on equity established in the approved revenue requirement; and (iii) proposed performance metrics applicable to their individual circumstances. A key component of rate-setting under the RRF is benchmarking evidence to support cost forecasts and system planning proposals.

Recent Transmission Rate Applications

Hydro One Networks, B2M LP, HOSSM, NRLP, and CLLP file separate applications to the OEB for the approval of their transmission revenue requirement for transmission services.

Hydro One Networks

In August 2021, Hydro One Networks filed a custom joint rate application for 2023-2027 (the “JRAP”), which included a proposed investment plan supporting the transmission and distribution revenue requirements. The JRAP requested the OEB’s approval of transmission revenue requirements of $1,823 million for 2023, $1,938 million for 2024, $2,028 million for 2025, $2,140 million for 2026 and $2,219 million for 2027.

In November 2022, the OEB approved the settlement in whole and issued its final rate order for the 2023-2027 transmission rates approving a revenue requirement of $1,952 million, $2,073 million, $2,168 million, $2,277 million, and $2,362 million for 2023, 2024, 2025, 2026, and 2027, respectively. Notwithstanding that the parties to settlement agreed to reduce Hydro One Networks’ proposed capital and operating expenditures, the approved revenue requirement exceeds Hydro One Networks’ proposed revenue requirement due to increases to the OEB’s cost of capital parameters and inflation factor for 2023.

Following the OEB approval of the JRAP and completion of the recovery of deferred tax asset amounts, Hydro One Networks’ effective tax rate over the JRAP period is expected to be between 13% and 16%. See also “Business of Hydro One – Distribution Business Segment – Regulation – Recent Distribution Rate Applications – Hydro One Networks”.

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B2M Limited Partnership

In May 2024, B2M LP filed a five-year transmission revenue requirement application for 2025-2029. In November 2024, the OEB approved the settlement proposal, which includes a 2025 base revenue requirement of $38.4 million, effective January 1, 2025, and the revenue requirement framework for 2026 to 2029. In October 2025, the OEB approved base revenue requirements of $37.9 million, $38.9 million, $38.8 million, and $37.2 million for 2026, 2027, 2028, and 2029, respectively.
HOSSM

HOSSM is under a ten-year deferred rebasing period for years 2017-2026, following receipt of approval by the OEB of Hydro One’s acquisition of HOSSM in October 2016. In July 2018, HOSSM filed a 2019 application to allow for inflationary increase (“revenue cap escalator factor”) to its previously approved revenue requirement. The revenue cap escalator factor is designed to add inflationary increases to the revenue requirement on an annual basis. In June 2019, the OEB approved the revenue cap escalator index at 1.1% (net), which was applied to HOSSM’s base revenue requirement for 2019, effective February 1, 2019, and also approved the 2019-2026 revenue cap framework. The revenue requirement is updated annually, and in September 2025, the OEB approved a rate increase of 2.35% effective January 1, 2026.

Niagara Reinforcement Limited Partnership

In May 2024, NRLP filed a five-year transmission revenue requirement application for 2025-2029. In November 2024, the OEB approved the settlement proposal, which includes a 2025 base revenue requirement of $8.9 million, effective January 1, 2025, and the revenue requirement framework for 2026 to 2029. In October 2025, the OEB approved base revenue requirements of $8.8 million, $8.7 million, $8.7 million, and $9.3 million for 2026, 2027, 2028, and 2029, respectively.

Chatham x Lakeshore Limited Partnership

In 2024, CLLP was formed for the purpose of owning a double circuit 230 kV transmission line from the Chatham Switching Station to the Lakeshore TS. In July 2024, CLLP filed a five-year transmission revenue requirement application for 2025-2029. In December 2024, the OEB approved the settlement proposal, which includes a 2025 base revenue requirement of $16.7 million, effective January 1, 2025, and the revenue requirement framework for 2026 to 2029. In December 2025, the OEB approved base revenue requirements of $16.6 million, $16.5 million, $16.3 million, and $16.2 million for 2026, 2027, 2028, and 2029, respectively.

Reliability Standards and Regulations for Transmission

The Company’s transmission business is required to comply with various mandatory regulations for transmission reliability, including mandatory standards, directories, market rules, and the Transmission System Code (collectively, the “Reliability Standards”) established by NERC, NPCC, the OEB and the
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IESO, which are international, regional and Ontario reliability regulatory authorities, respectively, involved in regulating, promoting and otherwise improving the reliability of transmission networks in North America. Hydro One’s compliance with these Reliability Standards is enforced by the OEB, IESO and the Canada Energy Regulator.

In addition to the currently enforced Reliability Standards, NERC, NPCC, the OEB and IESO continue to develop and issue new and revised Reliability Standards and other regulations, including Critical Infrastructure Protection Standards and Cybersecurity Regulations with which Hydro One and other utilities, owners and operators of the bulk electricity system in North America must comply. Hydro One expects to continue to perform work, and to incur associated costs, in order to achieve, sustain and demonstrate compliance with all of these Reliability Standards. Hydro One anticipates that these costs will be recovered in rates. See the Annual MD&A under the subheadings “Risk Management and Risk Factors – Risks Relating to Hydro One’s Business – Compliance with Laws and Regulations”, “Risk Management and Risk Factors – Risks Relating to Hydro One’s Business – Risk Associated with IT, Operational Technology (OT) Infrastructure and Data Security” and “Risk Management and Risk Factors – Risks Relating to Hydro One’s Business – Risks Relating to Asset Condition, Capital Projects and Innovation” for more information.

Regional Planning

The OEB oversees regional planning processes to ensure that transmission and distribution investments are coordinated at a regional level. One of the OEB objectives for regional planning is to review and/or rely on the recommendations within the regional planning reports to support rate applications submitted by transmitters and distributors and “leave to construct” applications submitted by transmitters. In Ontario, the first and last phases (Needs Assessment and Regional Infrastructural Plan) of the regional planning process are led by the transmitter responsible for a particular geographic region. Hydro One also coordinates with the IESO on its Integrated Regional Resource Planning, which is another phase of the regional planning process. For this purpose, the province is divided into 21 regions. As the largest transmitter in Ontario, Hydro One plays a key role in the regional planning process and is responsible for leading the regional planning process in 20 of the 21 designated regions.

In conducting regional planning, Hydro One works closely with the IESO and all distributors in the region through study teams to jointly identify needs and develop transmission and distribution investment options.

Hydro One has participated as part of the OEB’s Regional Planning Process Advisory Group (“RPPAG”), comprised of a number of interested stakeholders, which supports the OEB in its review of the regional planning process that applies to Ontario’s electricity sector, to improve efficiency and effectiveness. Following from the Province’s June 2025 letter of direction to the OEB regarding the implementation of the Province’s Integrated Energy Plan, in August 2025, the OEB announced a further review and established a Regional and Bulk Planning Process Advisory Group (“RBPPAG”) to review and recommend enhancements to regional and bulk planning processes to make processes more efficient,
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flexible and responsive to Ontario’s needs. Hydro One continues to work closely with the OEB to support the review of these planning processes, and is participating in the RBPPAG. The RBPPAG is expected to provide the OEB with its recommendations, and the OEB is expected to deliver its report with recommendations for process improvements to the Minister of Energy in early 2026.

Key Transmission Projects

The Province’s October 2024 energy vision, Ontario’s Affordable Energy Future, sets out the Province’s initiatives to meet growing electricity demand in Ontario, including in relation to Ontario’s transmission network. As noted in this vision statement, over the past six years, the Province has accelerated development for new priority transmission lines in southwestern, northeastern, and eastern Ontario. The Province’s IEP released in June 2025 establishes a planning horizon out to 2050, including the acceleration of the development of transmission infrastructure. As part of the IEP, the Province announced the advancement of several transmission projects. See “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario Integrated Energy Plan” for more information.

Through directives between 2020 and 2026, the Minister of Energy directed the OEB to amend, and the OEB has amended, Hydro One Networks’ transmission licence to develop and seek approvals for these new priority transmission lines. As a result of these licence amendments, Hydro One Networks’ licence now includes:

•Bowmanville to Parkway Transmission Line – a 500 kV line from Bowmanville Switching Station to one of Parkway TS, Claireville TS, or Cherrywood TS;
•Chatham to Lakeshore Transmission Line – a 230 kV line from Chatham Switching Station to the new Lakeshore TS in the municipality of Lakeshore;
•Durham Kawartha Power Line – a 230 kV transmission line between either Cherrywood TS or Clarington TS and Dobbin TS;
•Greenstone Transmission Line – a 230 kV transmission line between the East-West Tie and Longlac TS and extending to or near Aroland First Nation, terminating at a new switching station;
•Longwood to Lakeshore Transmission Line – a 500 kV line from Longwood TS, west of London, to the new Lakeshore TS;
•Second Longwood to Lakeshore Transmission Line – a second 500 kV line from Longwood TS to Lakeshore TS, with scope to be further refined through planning by the IESO;
•North Shore Link – a 230 kV transmission line between Mississagi TS and Third Line TS;
•Northeast Power Line – a 500 kV transmission line between Hanmer TS and Mississagi TS;
•St. Clair Transmission Line – a 230 kV line from Lambton TS, south of Sarnia, to Chatham Switching Station;
•Sudbury to Barrie Transmission Line – a single circuit 500 kV transmission line between Essa TS and Hanmer TS, including associated station facilities;
•Second Sudbury to Barrie Transmission Line – a second single circuit 500 kV transmission line from Essa TS to Hanmer TS, including associated station facilities;
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•Wawa Timmins Power Line – a 500 kV transmission line between Wawa TS and Porcupine TS; and
•Windsor to Lakeshore Transmission Line – a 230 kV line that would run from the Windsor area to Lakeshore TS, with scope to be further refined through planning by the IESO.

Through Hydro One’s First Nation equity partnership model, First Nations have the opportunity to invest in a 50% equity stake in the transmission line component of all new large-scale capital transmission line projects. See also “Business of Hydro One – Indigenous Communities” and “Business of Hydro One – Transmission Business Segment – Business – First Nation Equity Partnership Model”.

Hydro One has a portfolio of transmission projects across the province of Ontario. See the Annual MD&A under the subheadings “Other Developments” and “Capital Investments – Major Transmission Capital Investment Projects” for more information on significant transmission projects.

Capital Expenditures

From 2026 to 2027, the Company anticipates that it will spend in the range of approximately $1,892 million to $2,116 million per year on capital expenditures relating to its transmission business. The Company’s capital expenditure plans are included in Hydro One’s applications to the OEB for transmission and distribution, and are subject to approval by the OEB. See the Annual MD&A under the subheadings “Capital Investments – Future Capital Investments” and “Capital Investments – Major Transmission Capital Investment Projects” for more information on future capital expenditures.

The Company incurs both sustaining capital expenditures and development capital expenditures. Sustaining capital expenditures are those investments required to replace or refurbish our assets and facilities to ensure that the transmission system continues to function as originally designed. Hydro One’s plans to maintain, refurbish or replace existing assets are based upon risk assessments, asset condition assessments and end-of-service life criteria specific to each type of asset. Priorities are assigned to each type of investment based upon the extent of the risks that it mitigates.

Investments to sustain Hydro One’s transmission assets are critical to maintain the safety, reliability and integrity of its existing transmission network. Hydro One’s sustainment capital plan is designed to maintain Hydro One’s transmission reliability performance, as determined by measures such as the average frequency and duration (in minutes) of unplanned interruptions per delivery point. The Company expects that significant investments will be required to sustain its existing infrastructure over the long term.

The Company’s development capital expenditure plan is designed to address Ontario’s expected change in the generation profile, accommodate load growth in areas throughout Ontario and support the economic growth in Ontario including industrial and agricultural growth and connection of the remote communities in the northern part of the province. Development capital expenditures include those investments required to develop and build new large-scale projects such as new transmission lines and
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stations as well as smaller projects such as transmission line or station reinforcements, extensions or additions to connect generation or serve load.

The Company engages with various stakeholders, including its customers and the IESO, as it develops its capital plans. It also engages affected communities and parties who may be impacted by individual projects. The Company also consults with Indigenous communities whose rights may be affected by its projects.

Competitive Conditions

Within our principal market of Ontario, the Company operates and maintains substantially all of the transmission system. Competition for transmission services in Ontario has been limited. The adoption by the OEB of uniform transmission rates that apply to all transmitters also reduces the financial incentive for customers to seek alternative transmission providers, since each transmitter in Ontario charges the same uniform rate for transmission services. Hydro One competes with other transmitters for the opportunity to build new large-scale transmission projects in Ontario. The competitive process was amended in 2016 by the proclamation of the Energy Statute Law Amendment Act to allow for the selection of a transmitter outside the existing competitive process. In 2017, the Minister of Energy directed the IESO to develop a competitive transmitter selection or transmission procurement process. Subsequently, development and engagement work began.

In November 2023, the IESO launched an engagement initiative with stakeholders on the development of a TSF. This followed a July 2023 letter of direction to the IESO from the Minister of Energy, flowing from initiatives set out in the Province’s Powering Ontario’s Growth report released in July 2023. The Province’s expectation was that the development of a TSF would evolve Ontario’s current approach to transmitter selection for transmission projects. In October 2024, June 2025, and January 2026, the IESO released feedback and responses to engagements on the TSF.

Under the TSF, successful electricity transmitter applicants to the TSF registry, which is now in place, are eligible to participate in future IESO competitive transmission procurements. As currently proposed by the IESO, the TSF would apply to identified transmission projects that need to meet the following minimum criteria: new facilities only; benefit all electricity ratepayers; estimated cost of $100 million or greater; nominal voltage of 200 kV or greater; and sufficient lead time (at least 6 years). It is expected that successful proposals would also be required to demonstrate Indigenous participation. Identified transmission projects that do not meet all of the above-listed criteria are proposed to be designated to incumbent transmitters, such as Hydro One. The IESO is considering that successful TSF proponents would be awarded partial contracts for a yet-to-be-determined number of years following commercial operation, after which time a utility rate regulation mechanism administered by the OEB would apply. The IESO recommenced engagement on the TSF in January 2025 to refine design considerations, including Indigenous participation requirements. Once the IESO finalizes their TSF design recommendations, it is expected that the Minister of Energy will next determine whether to proceed with implementing the TSF as described, or if additional design or implementation work should be considered.
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In January 2026, the IESO began engagement on the design of a competitive procurement process for the Toronto Third Line, as well as consultations for an Indigenous participation framework. See “The Electricity Industry in Ontario – Regulation of Transmission and Distribution – IESO” and “the Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Ontario Integrated Energy Plan” for more information.

Hydro One does not compete with other transmitters with respect to investments which are made to sustain or develop its existing transmission infrastructure.

Distribution Business Segment

Overview

Hydro One’s distribution business consists of owning, operating and maintaining Hydro One’s distribution system, which Hydro One, through Hydro One Inc., owns primarily through its wholly-owned subsidiary, Hydro One Networks, the largest local distribution company in Ontario. The Company’s distribution system is also the largest in Ontario. The Company’s distribution business is a rate-regulated business that earns revenues mainly by charging distribution rates that are subject to approval by the OEB. Hydro One’s distribution business also includes the business of its wholly-owned subsidiary, Hydro One Remote Communities, which supplies electricity to customers in remote communities in northern Ontario. The Company’s distribution rates are generally determined using a performance-based model, except for the distribution rates of Hydro One Remote Communities, which are set on a cost-recovery basis and do not include a return on equity.

Hydro One’s distribution business represented approximately 38% of its total assets as at December 31, 2025, and accounted for approximately 46% of its total revenues in 2025, net of purchased power,7 and approximately 72% of its total revenues in 2025 and approximately 47% of its total revenues in 2024, net of purchased power and approximately 72% of its total revenues in 2024. Distribution revenues include distribution rates approved by the OEB and amounts to reimburse Hydro One for the cost of purchasing electricity delivered to its distribution customers. Distribution revenues also include minor ancillary service revenues, such as fees related to the joint use of the Company’s distribution poles by participants in the telecommunications and cable television industries, as well as miscellaneous revenues such as charges for late payments.

As at December 31, 2025, Hydro One’s distribution assets were approximately $15 billion.

Business

Hydro One delivers electricity through its distribution network to approximately 1.5 million residential and business customers, most of whom are located in rural areas, as well as 42 local distribution companies (including Hydro One’s own distribution business).
7    Revenues, net of purchased power is a non-GAAP financial measure.
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Hydro One’s distribution system includes approximately 126,000 circuit kilometres of primary low-voltage distribution lines and approximately 1,000 distribution and regulating stations. Other distribution assets include poles, transformers, service centres and equipment.

Hydro One’s distribution system services a predominantly rural territory. As a result of the lower population density in the Company’s service territory, the Company’s costs to provide distribution services may be higher than those of distributors who service urban areas. Furthermore, unlike the distribution systems found in urban areas, most of Hydro One’s distribution system was not designed with redundancy, to be interconnected in loops with other distribution lines, with the result that interruptions experienced at any point along a distribution line in Hydro One’s network can cause all customers downstream of the interruption point to lose power. Accordingly, the reliability of Hydro One’s distribution system is lower than that of local distribution companies which service urban territories that typically have redundancy built into their systems.

The Company engages in vegetation management activities to maintain the reliability of Hydro One’s distribution system on a preventive basis and to protect public health and safety. This consists of the trimming or removal of trees to lower the risk of contact with distribution lines, thereby reducing the risk of power outages, and preventing potential injury to the public or employees. The Company’s monitoring systems assist with determining areas of priority and with system restoration. The Company relies on its local line crews for these restoration activities.

Hydro One’s distribution business is involved in the connection of electricity generation, including renewable energy. Hydro One invests in upgrades and modifications to its distribution system to accommodate these sources of generation and ensure the continued reliability of its distribution network. As at December 31, 2025, there were approximately 20,800 embedded generators connected to Hydro One’s distribution network.

Hydro One has played a significant role in the installation of smart meters and the migration of distribution customers to time-of-use pricing in Ontario. Smart meters are regarded as an integral means of promoting a culture of conservation and allow customers to change their electricity consumption patterns and reduce their costs. As part of the JRAP, in November 2022, the OEB approved in whole Hydro One Networks’ proposed capital program to modernize the entire smart metering infrastructure as system and assets reach their end of service over the next several years. Hydro One piloted this new system in 2024 through 2025. Implementation is in progress and is expected to occur through 2029. See “Business of Hydro One – Transmission Business Segment – Regulation – Recent Transmission Rate Applications – Hydro One Networks” and “Business of Hydro One – Distribution Business Segment – Regulation – Recent Distribution Rate Applications – Hydro One Networks” for more information on Hydro One Networks’ application.

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Regulation

Distribution Rates

Distribution rates in Ontario are determined using a performance-based model set out in the OEB’s Renewed Regulatory Framework for Electricity Distributors: A Performance-Based Approach, which is sometimes referred to as the “RRF”. Under the RRF, distributors in Ontario may choose one of three rate-setting methods, depending on their capital requirements: 4th Generation Incentive Rate-Setting (now known as “Price Cap IR”), Custom IR Method, or Annual Incentive Rate-Setting Index.

The RRF contemplates that under the Price Cap IR method, a distributor will apply for the approval of its revenue requirement for an initial base year, reflecting the distributor’s cost of service. The revenue requirement for subsequent years is determined based on a formula that accounts for inflation and certain productivity factors set by the regulator. The revenue requirement in these subsequent years is set on the assumption that the distributor will achieve efficiency or productivity improvements to offset the productivity factor imposed by the regulator.

Under the Custom IR Method, a similar methodology to the Price Cap IR may be used; however, applications are multi-year and are designed to reflect a distributor-specific revenue trend for the application term. For example, a distributor may request incremental capital funding beyond amounts established in the base year revenue requirement.

The scope of applications under the Annual Incentive Rate-Setting Index option is limited to formulaic adjustments to prior year OEB-approved rates. The adjustment provides an increase based on inflation, partially offset by a productivity factor. Distributors under this plan do not have access to mechanisms for additional capital funding beyond the formulaic adjustment.

The RRF allows the distributor to retain all or a portion of the cost savings achieved in excess of the estimate established by the regulator during the period covered by the rate decision, subject to any sharing mechanisms that may be required by the OEB, as indicated in the decision of each rate application. This approach allows the distributor an ability to earn more than its allowed return on equity. The RRF also requires distributors to demonstrate certain performance outcomes, namely: customer focus, operational effectiveness, public policy responsiveness and financial performance. The OEB has stated that customer-focused outcomes and continuous performance improvements by distributors are central to the RRF framework objectives and are considered as part of a distributor rate application.

Performance measures are an important part of the RRF, and the OEB has established a standard performance scorecard for all distributors, which is reported annually. Distributors may also propose additional performance measures for approval by the OEB. Distributors are required to report to the OEB on their performance against the performance measures approved.

The OEB’s review process of the anticipated cost of service for providing distribution services under the
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RRF follows a process similar to that of a transmission rate application. Once the revenue requirement for distribution services is determined, it is allocated across the distributor’s customer rate classes using a methodology approved by the OEB resulting in the setting of individual rates for distribution services based on each customer rate class. Distribution rates in Ontario are not the same for all distributors and reflect the particular circumstances of each distributor, including its own costs of providing electricity service to its own particular customers. The OEB policy, A New Distribution Rate Design for Residential Electricity Customers, changed the distribution rate design for residential customers (a combination of a fixed monthly rate and a variable charge) to a fixed monthly charge only. In December 2015, the OEB increased the transition period for certain customer classes of Hydro One Networks to mitigate bill impacts. Implementation of all fixed distribution rates was completed in 2023 for the majority of Hydro One Networks’ residential customers. Changes to rate design do not impact the total revenue to be collected from these customer classes.

Recent Distribution Rate Applications

The Company’s distribution rates, other than the distribution rates of Hydro One Remote Communities, are determined by using a performance-based model.

Hydro One Networks

In August 2021, Hydro One Networks filed a custom joint rate application for 2023-2027 (the “JRAP”), which included a proposed investment plan supporting the transmission and distribution revenue requirements. The JRAP requested the OEB’s approval of distribution revenue requirements of $1,632 million for 2023, $1,711 million for 2024, $1,785 million for 2025, $1,881 million for 2026 and $1,965 million for 2027. In March 2022, Hydro One Networks filed updated evidence reflecting the impacts of updated inflation assumptions on the proposed investment plan as well as updated load forecasts. In October 2022, Hydro One Networks filed a settlement proposal with the OEB, which was further updated in November 2022 to reflect, among other things, the OEB’s cost of capital parameters and inflation factor for 2023. In November 2022, the OEB approved the settlement in whole and issued its final rate order for the 2023-2027 distribution rates approving a revenue requirement of $1,727 million, $1,813 million, $1,886 million, $1,985 million, and $2,071 million for 2023, 2024, 2025, 2026, and 2027, respectively. Notwithstanding that the parties to settlement agreed to reduce Hydro One Networks’ proposed capital and operating expenditures, the approved revenue requirement exceeds Hydro One Networks’ proposed revenue requirement due to increases to the OEB’s cost of capital parameters and inflation factor for 2023. See “Business of Hydro One – Transmission Business Segment – Regulation – Recent Transmission Rate Applications – Hydro One Networks” for more information.

In August 2025, Hydro One Networks filed a Z-Factor application with the OEB to seek recovery of costs incurred for a severe storm that began on March 28, 2025. Z-Factor applications enable utilities to seek cost recovery within a rate period for unforeseen events. The application seeks recovery of approximately $225 million in storm-related costs, including capital and asset removal costs. A decision is anticipated by early 2026.
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Hydro One Remote Communities

In August 2022, Hydro One Remote Communities filed its Cost of Service rate application for 2023-2027 revenue requirements, including Rural and Remote Rate Protection (“RRRP”), and customer rates for the distribution and generation of electricity in the Hydro One Remote Communities service area. In March 2023, the OEB approved the Hydro One Remote Communities’ application, including a 2023 revenue requirement application of $128 million, effective May 1, 2023, and a price cap escalator index for 2024 to 2027.

Hydro One Remote Communities’ business is exempt from a number of sections of the Electricity Act which relate to the competitive market. For example, Hydro One Remote Communities continues to apply bundled rates to customers in remote communities. Hydro One Remote Communities’ business is operated on a break-even basis, without a return on equity included in rates. As a result, any net income or loss in the year related to the regulated operations of Hydro One Remote Communities is recorded in a regulatory variance account for disposition in future rate applications.

Electricity Demand Side Management

In January 2025, the Province announced new energy efficiency programs launching in 2025. The new 2025-2036 Electricity Energy Efficiency Framework is established for a 12-year term from January 1, 2025 to December 31, 2036, and includes programs for the residential, commercial, institutional, industrial and agricultural segments in addition to programs for income-qualified households and on-reserve Indigenous communities. In addition, the Province directed the IESO to launch measures within the 2025-2036 Framework to promote electrification. The IESO manages the framework through three-year demand-side management plans that establish budgets and demand and energy savings targets by sector, with a mid-point review in year six.

Under the 2025-2036 Framework, distributors are responsible for delivering energy efficiency program marketing and customer engagement activities to drive awareness and participation in the programs offered under the 2025-2036 Framework, which is to be funded by the IESO. In July 2025, the OEB launched a consultation to establish a funding mechanism for further distributor-led eDSM programs to address distribution system needs and provide bulk system benefits.

Capital Expenditures

Hydro One’s asset sustainment activities are based on an assessment of asset condition. Distribution asset renewals are undertaken when assessments indicate there is a high risk of failure and where further maintenance activities are not appropriate. The Company expects capital expenditures for its distribution business in the near term to focus on new load connections, storm damage, and the replacement of its legacy metering network. In addition, the Company expects to continue to construct new distribution lines and stations and upgrade existing distribution lines and stations in response to system growth forecasts,
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continued suburban community development, high load relief requirements and requirements to connect new sources of generation. From 2026 to 2027, the Company expects that it will spend in the range of approximately $918 million to $1,093 million per year on capital expenditures relating to its distribution business. In August 2025, the Company submitted a Z-Factor application to the OEB to seek recovery for costs incurred from a severe storm that began on March 28, 2025, and continued into the second quarter, impacting the central and eastern regions of the Province. While the event was isolated to 2025, the forecast for capital expenditures may be updated pending the outcome of that decision. See the Annual MD&A under the subheadings “Capital Investments – Future Capital Investments” for more information on future capital expenditures.

Hydro One is continuing to modernize its distribution system through the deployment of smart devices (including remotely controllable switches and breakers as well as faulted circuit indicators) as power system assets are renewed. Hydro One has implemented a Distribution Management System (“DMS”) at its centralized control centre. The DMS has enabled Hydro One to monitor and control distribution components, perform real-time analysis and determine, with greater precision, the location of equipment failures. Additional functionality is planned to allow field staff to view system conditions remotely in real-time. Smart metering data will also be used to deliver operational and asset management benefits such as better notification of outages and their scope, asset loading information and other data. See the Annual MD&A under the subheading “Capital Investments – Future Capital Investments” for more information on future capital expenditures.

Competitive Conditions

Hydro One’s distribution service area is described in its distribution licence issued by the OEB. Only one distributor is permitted to provide distribution services in a service territory, and distributors have exclusive rights to provide service to new customers located within their service territory. As a result, there is very little direct competition for distribution services in Ontario, except near the borders of adjoining service territories, where a distributor may apply to the OEB to claim the right to serve new customers or new loads not currently connected to its distribution grid.

Ontario remains an active environment for local distribution company consolidation, resulting in competition for acquisition or merger opportunities. Potential acquirers may include strategic and financial buyers, in addition to other local distribution companies. Hydro One believes that it is well-positioned to continue to pursue consolidation opportunities within Ontario that are beneficial to all stakeholders. Consolidation continues within Ontario. See also “The Electricity Industry in Ontario – Issues Affecting the Electricity Industry Generally – Tax Incentives” for more information.

Other Segment

Hydro One’s other segment consists principally of its telecommunications business, which provides telecommunications support for the Company’s transmission and distribution businesses. The telecommunications business is carried out by its wholly-owned subsidiary Acronym Solutions Inc. It also
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offers comprehensive information and communications technology (ICT) services and solutions (including: internet & network, security, voice & collaboration, cloud and managed IT) that extend beyond Acronym Solutions Inc.’s fibre optic network, in a competitive commercial market.

Acronym Solutions Inc. is not regulated by the OEB. However, Acronym Solutions Inc. is registered with the Canadian Radio-television and Telecommunications Commission as a non-dominant, facilities-based carrier, providing broadband telecommunications services in Ontario with connections to Montreal, Quebec; Buffalo, New York; and Detroit, Michigan.

The other segment also includes a deferred tax asset. The deferred tax asset 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 the Company’s initial public offering in 2015.

Furthermore, Hydro One’s other segment also includes Aux Energy Inc., a wholly-owned subsidiary that provides energy solutions to commercial and industrial clients, and Ontario Charging Network LP, which owns and operates electric vehicle fast charging stations across Ontario under the Ivy Charging Network brand, as well as certain corporate activities, and is not rate-regulated.

The other segment represented approximately 2% of Hydro One’s total assets as at December 31, 2025, and accounted for approximately 1% of its total revenues, net of purchased power,8 in 2025 and 2024 and approximately 1% of its total revenues in 2025 and 2024.

Indigenous Communities

Hydro One believes that building and maintaining respectful, positive and mutually beneficial relationships with Indigenous communities across the province is important to advancing action on reconciliation and achieving the Company’s corporate objectives. Hydro One has established an Indigenous Relations Policy, demonstrating the Company’s desire to work proactively to build relationships with Indigenous communities based on understanding, respect and mutual trust. Hydro One is committed to working with Indigenous communities in a spirit of cooperation, partnership and shared responsibility. Hydro One’s equity partnerships with the Saugeen Ojibway Nation in respect of the Bruce-to-Milton transmission line and with the Six Nations of the Grand River Development Corporation and the Mississaugas of the Credit First Nation in respect of the Niagara Line demonstrate the Company’s commitment to these principles. In keeping with the Company’s Indigenous Relations Policy, Hydro One’s Indigenous Partnership and Business Development team provides guidance and advice to support the Company in developing and advancing positive relationships. Hydro One also has several programs related to Indigenous communities and their citizens. These include educational and training opportunities which provide opportunities for work terms, Indigenous procurement partnership agreements along with community investments, customer support and outreach. Together, Hydro One Networks and Hydro One Remote Communities serve more than 100 First Nation communities.
8    Revenues, net of purchased power is a non-GAAP financial measure.
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In 2022, Hydro One announced its new equity partnership model pursuant to which it will offer First Nations a 50% equity stake in all new large-scale capital transmission line projects with a value exceeding $100 million. See also “Business of Hydro One – Transmission Business Segment – Business – First Nation Equity Partnership Model” for more information.

Hydro One supports Indigenous Procurement and has committed to reaching a target of 5% of total sourceable spend with Indigenous businesses by 2026.

The Company’s Indigenous Peoples, Safety & Operations Committee of the Board is responsible for assisting the Board in discharging the Board’s oversight of responsibilities relating to effective occupational health and safety and environmental policies and practices at Hydro One, and its relationship with Indigenous communities.

Outsourced Services

Hydro One has outsourced certain non-core functions, including facilities management services with respect to its stations and other facilities, and certain information technology. Certain information technology services are provided by a third-party service provider under an agreement that expires on July 31, 2028. The Company’s facilities management services are provided by a third-party service provider under an agreement that expires on September 14, 2027.

Employees

As at December 31, 2025, Hydro One had approximately 7,200 regular and 1,900 non-regular employees province-wide comprised of a mix of skilled trades, engineering, professional, managerial and executive personnel. The average number of Hydro One employees in 2025 was approximately 9,600, consisting of approximately 7,200 regular employees and approximately 2,400 non-regular employees. Hydro One’s regular employees are supplemented primarily by accessing a large external labour force available through arrangements with the Company’s trade unions for contingent workers, sometimes referred to as “hiring halls”, and also by access to contract personnel. The hiring halls offer Hydro One the ability to access highly trained and appropriately skilled workers on a project-by-project basis. This arrangement provides the Company with more flexibility to address seasonal needs and unanticipated changes to its budgeted work programs. The Company also offers apprenticeship and technical training programs to ensure that future staffing needs will continue to be met.

The collective agreement between Hydro One Inc. and the Society of United Professionals (the “Society”) expired on September 30, 2025. On January 13, 2026, Hydro One Inc. and the Society announced that a tentative agreement had been reached. On January 30, 2026, the agreement was ratified by the Society-represented employees, covering the period from October 1, 2025, to March 31, 2028.

The collective agreement between Hydro One Inc. and the Power Workers’ Union (the “PWU”) (for the
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main agreement, covering classifications excluding Customer Service Operations (“CSO”)), as well as the collective agreement between Hydro One Inc. and PWU covering CSO expired on September 30, 2025. On May 4, 2025, Hydro One Inc. and the PWU reached tentative renewal agreements for both the main agreement and the CSO agreement, which merges the two agreements into one. On June 2, 2025, the agreement was ratified by the PWU-represented employees, covering the period from October 1, 2025, to March 31, 2028.

The construction building trade unions have collective agreements with the Electrical Power Systems Construction Association (the “EPSCA”). EPSCA is an employers’ association of which Hydro One is a member. The EPSCA construction collective agreements, which bind Hydro One, expired on April 30, 2025. Ratified five-year renewal collective agreements, covering May 1, 2025 to April 30, 2030, have been reached with all of the building trades. The Canadian Union of Skilled Workers (the “CUSW”) is an electrical construction union that represents Hydro One’s direct hire construction electrician and linespersons. The Hydro One Inc. and CUSW collective agreement covers the period from May 1, 2022 to April 30, 2026. See the Annual MD&A under the headings “Hydro One Work Force” and “Hydro One Work Force – Collective Agreements” for more information on employees.

Health, Safety and Environmental Management

Hydro One has health, safety and environment management systems that include key elements for the successful minimization of risk and continued performance improvements. Health, safety and environmental hazards and risks are identified and assessed, and controls are implemented to mitigate significant risks. The Company has policies in place regarding Health and Safety, Environment, Workplace Violence and Harassment and Public Safety.

Given the nature of the work undertaken by Hydro One employees, health and safety remain one of the Company’s top priorities. Safety is one of Hydro One’s core values. In 2025, the Company worked to build a refreshed safety plan for the 2026 to 2030 period, building on the prior safety improvement plan. The 2026 to 2030 safety plan consists of programs and initiatives for incident prevention and to minimize the risk of injury to its employees and the public associated with its business.

Hydro One’s recordable injury rate is below 1 per 200,000 hours worked, a level which has been maintained since 2019. While the Company will continue to monitor and focus on its recordable injury rate, its primary focus is on the elimination of all life altering serious injuries and fatalities as our key Health & Safety performance measure. The Company is also raising the profile of our near miss and safety catch reporting to ensure that the Company learns from and addresses the procedures, training and policies that lead to a safer workplace. All measures are monitored by management and by the Indigenous Peoples, Safety & Operations Committee, a committee of the Board. Management compensation has been tied, in part, to meaningfully improving annual health and safety performance targets. In the event of a fatality and subject to a system investigation, this component of management compensation would not be paid. A program allowing for an effective early and safe return to work has allowed the Company to ensure that, when injuries occur, employees recover and return to the workplace as soon as possible.
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Hydro One continues with its “Destination: Zero” safety initiative, which is supported by the Company’s Safety Absolutes, a set of guiding principles focused on the most critical hazards that could lead to a life-altering injury. Safety perception assessments are completed regularly. The most recent assessment identified opportunities for improvement and, along with other inputs, the Company used this information to develop activities that supported improvements to safety in the workplace.

Environmental Regulation

Hydro One is subject to extensive federal, provincial and municipal regulation relating to the protection of the environment that governs, among other things, environmental assessments, discharges to water, air and land, and the generation, storage, transportation, disposal and release of various hazardous substances. Estimated environmental liabilities are reviewed annually or more frequently if significant changes in regulation or other relevant factors occur. Estimated changes are accounted for prospectively.

Permits and Approvals

The Company is required to obtain and maintain specified permits and approvals from federal, provincial and municipal authorities relating to the design, construction and operation of new and upgraded transmission and distribution facilities. Examples include environmental assessment approvals, permits for facilities to be located in parks or other regulated areas, water crossing permits, and approvals to discharge to air and water. Some projects may require environmental approvals from the federal government. Interconnections with neighbouring utilities in other provinces and states also require federal approval and will be subject to federal regulatory review. Hydro One makes every effort during consultation to ensure that Indigenous communities are engaged and that their issues and concerns are reflected in the Company’s environmental assessment process and planning.

In general, transmission projects are subject to a class environmental assessment process, pursuant to the Environmental Assessment Act, which provides for streamlined approvals. The scope, timing and cost of environmental assessments are dependent on the scale and type of project, the location (urban versus rural), the environmental sensitivity of affected lands and the significance of potential environmental effects.

Regulation of Releases

Federal, provincial and municipal environmental legislation regulates the release of specific substances into the environment through the prohibition of discharges that will or may have an adverse effect on the environment, which can include liquids, gasses and noise. Releases occur in the course of the Company’s normal operations. Accordingly, Hydro One has spill, leak prevention and leak mitigation programs involving the testing, replacement, repair and installation of containment systems including re-gasketting of transformers and sulphur-hexafluoride-filled equipment. In addition, the Company has an emergency response capability which the Company believes is sufficient to minimize the environmental impact of
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spills and to comply with its legal obligations.

Hazardous Substances

Hydro One manages a number of hazardous substances, such as PCBs, herbicides, and wood preservatives. In addition, some facilities have substances present which are designated for special treatment under occupational health and safety legislation, such as asbestos, lead and mercury. The Company has environmental management programs in place to deal with PCBs, herbicides, asbestos, and other hazardous substances.

Land Assessment and Remediation

Hydro One has a proactive land assessment and remediation program in place to identify and, where necessary, remediate historical contamination that has resulted from past operational practices and uses of certain long-lasting chemicals at the Company’s facilities. These programs involve the systematic identification of contamination at or from these facilities and, where necessary, the development of remediation plans for the Company’s properties and affected adjacent private properties. As at December 31, 2025, future expenditures related to Hydro One’s land assessment and remediation program were estimated at approximately $43 million. These expenditures are expected to be spent over the period ending 2051. Additional acquisitions could add to land assessment and remediation expenditures. The expenditures on this program for 2025 were approximately $1 million. These costs are expected to be recovered in the Company’s transmission and distribution rates and amounts payable to the Company pursuant to the Rural or Remote Electricity Rate Protection Program.

Insurance

Hydro One maintains insurance coverage, including liability, all risk property, boiler and machinery and directors’ and officers’ insurance. The Company also maintains other insurance coverage that is required by law, covering risks such as automobile liability, pesticide liability and aircraft liability. The Company does not have insurance for damage to its transmission and distribution wires, poles or towers located outside transmission and distribution stations, including damage caused by severe weather, other natural disasters or catastrophic events or for environmental remediation costs. The OEB has generally permitted the recovery of costs associated with extreme weather events.

Ombudsman

The Electricity Act requires that the Company have an ombudsman to act as a liaison with customers and to establish procedures for the ombudsman to inquire into and report to the Board on matters raised with the ombudsman by or on behalf of customers. These procedures are set out in a written mandate and terms of reference.

The role of the ombudsman is to facilitate resolution of complaints by customers of the Company that
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remain unresolved after having been processed through the Company’s complaints handling process. The ombudsman is an impartial and independent investigator, who makes recommendations to facilitate the resolution of both individual and systemic issues with a view to achieving a resolution that is fair to both the customer and the Company. The main purposes of the ombudsman are to address procedural and substantive unfairness, handle unresolved complaints, conduct systemic reviews that will lead to improvements in programs and systems, support the Company in holding its employees accountable for carrying out the Company’s directives and their responsibilities, and support the Board in its mandate to govern in a just, fair, and equitable manner. The ombudsman is mandated to work with the OEB to maintain integrated procedures for liaising with the Company and inquiring into matters raised by customers with the ombudsman. The ombudsman is an office of last resort within the Company.

RISK FACTORS

A discussion of Hydro One Limited’s risk factors can be found under the heading “Risk Management and Risk Factors” in the Annual MD&A.

DIVIDENDS

The Company declared and has paid or will pay cash dividends to common shareholders from 2023 to date as follows:
Common Shares
Fiscal YearDate DeclaredRecord DatePayment DateAmount per Share
2023February 13March 15March 31$0.2796
May 4June 7June 30$0.2964
August 8September 13September 29$0.2964
November 7December 13December 29$0.2964
2024
February 12
March 13
March 28
$0.2964
May 13June 12June 28$0.3142
August 13September 11September 27$0.3142
November 6December 11December 31$0.3142
2025
February 19
March 12
March 31
$0.3142
May 7June 11June 30$0.3331
August 12September 10September 29$0.3331
November 12December 10December 31$0.3331
2026February 12March 11March 31$0.3331

Note:
For completed fiscal years, dividend payout ratios were: 65% in 2023, 64% in 2024 and 59% in 2025.

Dividend Policy

The Board has established a dividend policy pursuant to which Hydro One Limited expects to pay an annualised dividend amount on its common shares, based on a target payout ratio of 60% to 70% of net
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earnings. The amount and timing of any dividends payable by Hydro One Limited will be at the discretion of the Board and will be established on the basis of Hydro One’s results of operations, maintenance of its deemed regulatory capital structure, financial condition, cash requirements, the satisfaction of solvency tests imposed by corporate laws for the declaration and payment of dividends and other factors that the Board may consider relevant.

The preferred shares of Hydro One Limited are entitled to a preference over the common shares with respect to the payment of dividends. Other than the foregoing, there is currently no restriction that would prevent Hydro One Limited from paying dividends at current levels.

For more information on dividends, see the notes to the audited consolidated financial statements of Hydro One Limited as at and for the years ended December 31, 2025 and 2024.

Dividend Reinvestment Plan

In February 2016, the Board approved the creation of a dividend reinvestment plan (the “Dividend Reinvestment Plan”) which is currently in place. The Dividend Reinvestment Plan enables eligible shareholders to have their regular quarterly cash dividends automatically reinvested in additional Hydro One common shares acquired on the open market.

DESCRIPTION OF CAPITAL STRUCTURE

General Description of Capital Structure

The following description may not be complete and is subject to, and qualified in its entirety by reference to, the terms and provisions of Hydro One Limited’s articles, as they may be amended from time to time.
Hydro One Limited’s authorized share capital consists of an unlimited number of common shares and an unlimited number of preferred shares, issuable in series. As at December 31, 2025, there were 599,781,811 common shares, no Series 1 preferred shares and no Series 2 preferred shares issued and outstanding.

Common Shares

Holders of common shares are entitled to receive notice of and to attend all meetings of shareholders, except meetings at which only the holders of another class or series of shares are entitled to vote separately as a class or series, and holders of common shares are entitled to one vote per share at all such meetings of shareholders. Hydro One Limited’s common shares are not redeemable or retractable. Subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares, including the Series 1 preferred shares and Series 2 preferred shares, holders of common shares are entitled to receive dividends if, as, and when declared by the Board. Subject to the rights, privileges, restrictions and conditions attaching to any other class or series of shares, including the Series 1 preferred shares and Series 2 preferred shares, holders of common shares are also entitled to receive the remaining
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assets of Hydro One Limited upon its liquidation, dissolution or winding-up or other distribution of Hydro One Limited’s assets for the purposes of winding-up its affairs. See “Dividends – Dividend Policy” for a description of Hydro One Limited’s dividend policy.

The Voting Securities of Hydro One Limited, which include the common shares, are subject to the Share Ownership Restrictions under the Electricity Act and certain other provisions contained in the articles of Hydro One Limited related to the enforcement of those share ownership restrictions. The Share Ownership Restrictions provide that no person or company (or combination of persons or companies acting jointly or in concert), other than the Province or an underwriter who holds Voting Securities solely for the purposes of distributing them to purchasers who comply with the Share Ownership Restrictions, may beneficially own or exercise control or direction over more than 10% of any class or series of Voting Securities of Hydro One Limited.

Preferred Shares

Hydro One Limited may from time to time issue preferred shares in one or more series. Prior to issuing shares in a series, the Board is required to fix the number of shares in the series and determine the designation, rights, privileges, restrictions and conditions attaching to that series of preferred shares.

Subject to the OBCA, holders of Hydro One Limited’s preferred shares or a series thereof are not entitled to receive notice of, to attend or to vote at any meeting of the shareholders of Hydro One Limited except that votes may be granted to a series of preferred shares when dividends have not been paid on any one or more series as determined by the applicable series provisions. Each series of preferred shares ranks on parity with every other series of preferred shares with respect to dividends and the distribution of assets and return of capital in the event of the liquidation, dissolution or winding up of Hydro One Limited. The preferred shares are entitled to a preference over the common shares and any other shares ranking junior to the preferred shares with respect to payment of dividends and the distribution of assets and return of capital in the event of the liquidation, dissolution or winding up of Hydro One Limited.

Series 1 Preferred Shares and Series 2 Preferred Shares

For the period commencing from October 31, 2015, and ending on and including November 19, 2020, the holders of Series 1 preferred shares were entitled to receive fixed cumulative preferential dividends of $1.0625 per share per year, if and when declared by the Board, payable quarterly on the 20th day of November, February, May and August in each year. The dividend rate initially reset on November 20, 2020 and resets every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 3.53%. The Series 1 preferred shares became redeemable by Hydro One Limited on November 20, 2020 at a redemption price equal to $25.00 for each Series 1 preferred share redeemed, plus any accrued or unpaid dividends. The holders of Series 1 preferred shares had the right, at their option, on November 20, 2020 and every fifth year thereafter, to convert all or any of their Series 1 preferred shares into Series 2 preferred shares on a one-for-one basis, subject to certain restrictions on conversion. On November 20, 2020, Hydro One Limited completed the redemption of all of the
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outstanding Series 1 preferred shares in accordance with their terms.

The holders of Series 2 preferred shares will be entitled to receive quarterly floating rate cumulative dividends, if and when declared by the Board, at a rate equal to the sum of the then three-month Government of Canada treasury bill rate and 3.53% as reset quarterly. The Series 2 preferred shares will be redeemable by Hydro One Limited at a redemption price equal to $25.00 for each Series 2 preferred share redeemed if redeemed on November 20, 2025, or on November 20 every fifth year thereafter or $25.50 for each Series 2 preferred share redeemed if redeemed on any other date after November 20, 2020, in each case plus any accrued or unpaid dividends. The holders of Series 2 preferred shares will have the right, at their option, on November 20, 2025, and on November 20 every fifth year thereafter, to convert all or any of their Series 2 preferred shares into Series 1 preferred shares on a one-for-one basis, subject to certain restrictions on conversion.

In the event of the liquidation, dissolution or winding-up of Hydro One Limited, or any other distribution of assets of Hydro One Limited for the purpose of winding-up its affairs, the holders of Series 1 preferred shares and Series 2 preferred shares will be entitled to receive $25.00 for each Series 1 preferred share and each Series 2 preferred share held by them, plus any unpaid dividends, before any amounts are paid or any assets of Hydro One Limited are distributed to holders of common shares and any shares ranking junior to the Series 1 preferred shares and Series 2 preferred shares. After payment of those amounts, the holders of Series 1 preferred shares and Series 2 preferred shares will not be entitled to share in any further distribution of the property or assets of Hydro One Limited.

Except as required by the OBCA, neither the holders of Series 1 preferred shares nor the holders of Series 2 preferred shares shall be entitled to receive notice of, or to attend meetings of shareholders of Hydro One Limited and shall not be entitled to vote at any such meeting, unless Hydro One Limited fails for eight quarters, whether or not consecutive, to pay in full the dividends payable on the Series 1 preferred shares or Series 2 preferred shares, as applicable, whereupon the holders of Series 1 preferred shares and Series 2 preferred shares, as applicable, shall become entitled to receive notice of and attend all meetings of shareholders, except class meetings of any other class of shares, and shall have one vote for each Series 1 preferred share or Series 2 preferred share held at such meetings, as applicable.

CREDIT RATINGS

As of December 31, 2025, Hydro One Limited’s long-term debt ratings were as follows:

Rating Agency
Long-term Debt Rating
DBRS Limited (“DBRS”)A
S&P Global Ratings (“S&P”)A-

Hydro One Limited has also been assigned an issuer credit rating of A with a stable trend from DBRS and A with a stable outlook from S&P.
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Credit ratings are intended to provide investors with an independent measure of the credit quality of an issue of securities and are indicators of the likelihood of payment and of the capacity and willingness of a company to meet its financial commitment on an obligation in accordance with the terms of the obligation.

The rating agencies rate long-term debt instruments by rating categories ranging from a high of AAA to a low of D. Long-term debt instruments which are rated in the A category by DBRS are in the third highest category and are considered to be of a good credit quality, with substantial capacity for the payment of financial obligations. Entities in the A category may be vulnerable to future events, but qualifying negative factors are considered manageable. The “high” or “low” modifier indicates relative standing within this rating category by DBRS. The assignment of a “positive”, “stable” or “negative” trend provides guidance in respect of DBRS’ opinion regarding the trend for the rating. The rating trend indicates the direction in which DBRS considers the rating may move if present circumstances continue, or in certain cases, unless challenges are addressed by the issuer. Long-term debt instruments rated in the A category by S&P are in the third highest category and the obligation is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rated categories but the obligor’s capacity to meet its financial commitments on the obligation is still strong. S&P may modify the ratings from AA to CCC using a plus (+) or minus (-) sign to show relative standing within the rating categories. The addition of a rating outlook such as “stable”, “positive”, “negative” or “developing” assesses the potential direction of a long-term credit rating over the intermediate term (generally up to two years). A positive or negative outlook is not necessarily a precursor of a ratings change.

The ratings mentioned above are not a recommendation to purchase, sell or hold Hydro One Limited’s debt securities and do not comment as to market price or suitability for a particular investor. There can be no assurance that the ratings will remain in effect for any given period of time or that the ratings will not be revised or withdrawn entirely by any or all of DBRS and S&P at any time in the future if, in their judgment, circumstances so warrant.

Hydro One has made, and anticipates making, payments to each of DBRS and S&P pursuant to the ratings agency services agreements entered into with such credit rating organizations with respect to the ratings assigned to the long-term debt (including the 1.41% Notes) of Hydro One Limited and long-term debt and commercial paper of Hydro One Inc. There have been no other services provided by DBRS or S&P to Hydro One within the last two years.

Various ratings organizations review the Company’s debt ratings from time to time. These ratings organizations may take various actions, positive or negative. The Company cannot predict what actions rating agencies may take in the future. The failure to maintain the Company’s current credit ratings could adversely affect the Company’s financial condition and results of operations, and a downgrade in the Company’s credit ratings could restrict the Company’s ability to access debt capital markets and increase the Company’s cost of debt.
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MARKET FOR SECURITIES

Hydro One Limited’s Series 2020-1 Notes (1.41%) due October 15, 2027 are currently outstanding and are not listed on any exchange or similar market for securities.

Trading Price and Volume

The common shares are listed on the TSX under the symbol “H”. The following table sets forth the high and low reported trading prices and the trading volume of the common shares on the TSX for each month commencing January 2025:

PeriodHigh ($)Low ($)Volume
January 202545.6042.5214,937,375
February 202546.4443.3016,943,961
March 202549.4646.0829,516,340
April 202553.1146.4522,687,178
May 202553.9848.1719,897,631
June 202551.2548.2530,328,295
July 202549.7147.5416,174,360
August 202551.4048.8715,967,745
September 202550.2248.2226,535,151
October 202553.6749.0917,701,334
November 202555.4751.1017,266,898
December 202554.9851.9519,426,578
January 202654.9452.2917,180,336
February 1 to February 12, 2026
56.3653.559,947,133

DIRECTORS AND OFFICERS

Directors and Executive Officers

The following table sets forth information regarding the directors and executive officers as of December 31, 2025. Each director is elected annually to serve until the earlier of his or her resignation or until his or her successor is elected or appointed.
Name, Province or State
and Country of Residence
AgePosition/Title
Independent
Board Member
Principal OccupationCommittees
David Lebeter
Ontario, Canada
66President and CEOPresident and CEO
Harry Taylor
Ontario, Canada
65Executive Vice President, Chief Financial and Regulatory OfficerExecutive Vice President, Chief Financial and Regulatory Officer
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Name, Province or State
and Country of Residence
AgePosition/Title
Independent
Board Member
Principal OccupationCommittees
Teri French
Ontario, Canada
57Executive Vice President, Safety, Operations and Customer ExperienceExecutive Vice President, Safety, Operations and Customer Experience
Renée McKenzie
Ontario, Canada
51Executive Vice President, Digital and Technology Solutions Executive Vice President, Digital and Technology Solutions
Lisa Pearson
Ontario, Canada		51
Executive Vice President, Corporate Affairs(1)
Executive Vice President, Corporate Affairs(1)
Megan Telford
Ontario, Canada
51
Chief Operating Officer(2)
Chief Operating Officer(2)
Gillian Whitebread
Ontario, Canada
53
Executive Vice President, Head of Human Resources(3)
Executive Vice President, Head of Human Resources(3)
Melissa Sonberg(4)
Québec, Canada
65Director and Chair of the BoardYesDirector
David Hay(4)
New Brunswick, Canada
70DirectorYesManaging Director, Delgatie IncorporatedAudit Committee; Indigenous Peoples, Safety & Operations Committee
Stacey Mowbray(5)
Ontario, Canada
63DirectorYesDirectorAudit Committee; Human Resources Committee (Chair)
Mitch Panciuk(6)(7)(11)
Ontario, Canada
58DirectorYesPresident and CEO, Ontario One CallAudit Committee (Interim Chair); Indigenous Peoples, Safety and Operations Committee
Mark Podlasly(8)
British Columbia, Canada
60DirectorYesChief Executive Officer, First Nations Major Projects CoalitionHuman Resources Committee; Indigenous Peoples Safety and Operations Committee
Helga Reidel(6)(7)(12)
Ontario, Canada
65DirectorYesDirectorAudit Committee; Human Resources Committee
Michael Rencheck(9)
Ontario, Canada
64DirectorYesExecutive Vice Chair, Bruce PowerGovernance & Regulatory Committee
Brian Vaasjo(7)
Alberta, Canada
70DirectorYesDirectorGovernance & Regulatory Committee; Indigenous Peoples, Safety and Operations Committee (Chair)
Susan Wolburgh Jenah(6)(10)
Ontario, Canada
70DirectorYesDirectorGovernance & Regulatory Committee (Chair); Indigenous Peoples, Safety & Operations Committee

Notes:
(1)Ms. Pearson was appointed as Executive Vice President, Corporate Affairs effective July 21, 2025.
(2)Ms. Telford’s title became Chief Operating Officer effective July 21, 2025.
(3)Ms. Whitebread joined Hydro One as Executive Vice President, Head of Human Resources effective February 18, 2025.
(4)Ms. Sonberg and Mr. Hay were appointed on August 14, 2018.
(5)Ms. Mowbray was appointed on July 23, 2020.
(6)These directors have been designated as the Province’s nominees to the board of directors of Hydro One Limited and Hydro One Inc. for the purpose of the Governance Agreement.
(7)Mr. Panciuk, Ms. Reidel, and Mr. Vaasjo were elected on June 2, 2023.
(8)Mr. Podlasly was elected on June 8, 2022.
(9)Mr. Rencheck was elected on August 14, 2025.
(10)Ms. Wolburgh Jenah was appointed on January 1, 2020.
(11)Mr. Panciuk stepped down from his role as Interim Chair of the Audit Committee effective January 1, 2026.
(12)Ms. Reidel was appointed Chair of the Audit Committee effective January 1, 2026.

The following includes a brief profile of each of the executive officers and directors of Hydro One Limited, which includes a description of their present occupation and their principal occupations for the past five years:
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David Lebeter – President and Chief Executive Officer

David Lebeter serves as the President and CEO of Hydro One Limited and Hydro One Inc. With almost 20 years of leadership in prominent Canadian utilities, Mr. Lebeter is passionate about delivering innovative solutions for an electrified future. His priorities are to increase grid resilience, support sustainable economic growth, and exceed customers’ expectations as their demand for clean electric power increases.

Prior to his appointment as President and CEO of Hydro One Limited and Hydro One Inc. effective February 1, 2023, Mr. Lebeter served as the Chief Operating Officer of Hydro One Networks, a role he was appointed to in January 2020. In this role, he successfully managed Hydro One’s capital investments, grid reliability and system operations, laying the groundwork for the construction of hundreds of kilometers of required new transmission lines over the next two decades. His tenure as COO was also marked by improved safety standards, a cause he embraced early in his 23 years of operations in forestry.

Before joining Hydro One, Mr. Lebeter held progressively senior positions in operations and safety at BC Hydro from 2005 to 2019, contributing to advancements in safety, grid reliability, employee engagement, and customer service.

Mr. Lebeter holds a Bachelor of Forestry from the University of British Columbia, and is a registered professional forester (retired). In addition, Mr. Lebeter holds an Executive Master of Business Administration from Simon Fraser University. He holds his ICD.D from the Institute of Corporate Directors.

Harry Taylor – Executive Vice President, Chief Financial and Regulatory Officer

Harry Taylor is the Executive Vice President, Chief Financial and Regulatory Officer of Hydro One Limited and Hydro One Inc., a role to which he was appointed effective June 10, 2024. Mr. Taylor is responsible for the corporate finance, legal, and regulatory practices function, including privacy, treasury and tax, internal audit, risk, pensions and shared services, including supply chain, and investor relations. From August 25, 2025 to November 12, 2025, Mr. Taylor also served as Interim President and CEO while Mr. Lebeter was on a leave of absence.

Before joining Hydro One in 2024, Mr. Taylor held the position of Chief Financial Officer of Westjet Airlines, from 2015 to December 2022. During this time, Mr. Taylor briefly held the position of interim Chief Executive Officer of WestJet Airlines, for part of 2021 and 2022. Mr. Taylor is an engaging and inspirational leader who has driven profitable growth and built financial acumen across organizations.

Prior to his time at WestJet Airlines, Mr. Taylor was Chief Financial Officer, senior finance leader or division president in Canada and the United States for Canadian Tire Corporation, Holt Renfrew Limited, The Home Depot and PepsiCo/Frito-Lay. Before embarking on his operating company leadership career,
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Mr. Taylor spent five years consulting with McKinsey & Company and three years in public accounting with Clarkson Gordon (now Ernst & Young). Mr. Taylor has served on and worked with public and private company boards as well as not for profit boards in Canada and the United States.

Mr. Taylor holds a Bachelor of Commerce from the Rotman School of Management at the University of Toronto, a Chartered Accountant designation from the Institute of Chartered Professional Accountants of Ontario and a Master of Business Administration from the Ivey Business School, where he won the Western Gold Medal.

Teri French – Executive Vice President, Safety, Operations and Customer Experience

Teri French is the Executive Vice President, Safety, Operations and Customer Experience at Hydro One Limited and Hydro One Inc., a position she assumed in April 2023. Ms. French has enterprise responsibility for safety and drives improvements in reliability and customer experience in transmission, distribution, and system operations and maintenance. Ms. French was previously Vice President, Forestry Services, LDC Integration at Hydro One Networks, a role she assumed in 2021.

Ms. French has more than 25 years of proven success leading large scale operational functions. Before joining the Company, she held the positions of Vice President, Customer Operations and Retention and Vice President, Operations, Procurement and Franchise Operations at Enercare from 2014 to 2021 and Senior Director, Operations at Direct Energy from 2010-2014, where she led company-wide operational transformations, continuous improvement programs and employee development initiatives. Prior to Direct Energy, Ms. French held progressively more senior roles at Aviva Canada and ATCO in both finance and operations functions.

Ms. French is on the board of directors for the Ontario Chamber of Commerce as well as on the board of StepUp, an organization advancing gender equity, diversity and inclusion in Canada’s energy management sector. Ms. French holds a Bachelor of Arts in Psychology from Simon Fraser University and is a Fellow of the Institute of Chartered Professional Accountants (FCPA).

Renée McKenzie – Executive Vice President, Digital and Technology Solutions

Renée McKenzie is the Executive Vice President, Digital and Technology Solutions at Hydro One Limited and Hydro One Inc., a position she assumed in March 2024. In this role, Ms. McKenzie is responsible for the secure, compliant and resilient technology foundations that underpin the energization of Ontario, as well as the Company’s enterprise data and artificial intelligence function. Ms. McKenzie leads the team transforming the Company through effective use of real-time data and digital tools, future‑minded technology investments that create value for customers and shareholders, including oversight of Hydro One’s multi-year Enterprise Resource Planning (ERP) business transformation program and major initiatives such as advanced metering infrastructure modernization, and ensuring safe, reliable and secure operations across the Company.

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Ms. McKenzie is a successful technology executive with more than 25 years of experience delivering innovative and digital solutions to achieve strategic business goals, enhance customer satisfaction and drive operational efficiency. Before joining Hydro One, Ms. McKenzie held progressively more senior positions at OpenText beginning in 2004, most recently as EVP, Chief Information Officer, a position she held from 2021 to 2023, where she was responsible for leading multinational, high-performing teams to deliver large-scale integrations, enterprise data and artificial intelligence capabilities.

Ms. McKenzie holds a Master of Business Administration and a Bachelor of Science in Biology and Psychology from Dalhousie University.

Lisa Pearson – Executive Vice President, Corporate Affairs

Lisa Pearson is the Executive Vice President, Corporate Affairs at Hydro One Limited and Hydro One Inc., a role she assumed in July 2025. Ms. Pearson is responsible for building trusted partnerships in the communities it serves across Ontario. With a focus on growing relationships that deliver value for customers and shareholders, Ms. Pearson is accountable for Hydro One’s Indigenous relations, sustainability, communications, marketing, community investment, research and insights, as well as policy and partnerships, community, stakeholder and government relations.

Ms. Pearson is a transformational leader and executive with extensive experience advising boards and executive teams. She applies her broad private, public and not-for-profit sector knowledge to address complex public affairs challenges.

Ms. Pearson joined Hydro One in February 2024 as the Senior Vice President, Corporate Affairs. Before joining Hydro One, from November 2020 to January 2024, Ms. Pearson held the position of Vice President, Public Affairs at Extendicare, Canada’s largest provider of long-term care and home care where she led government relations, advocacy, marketing and communications. Prior to Extendicare, Ms. Pearson served as a managing principal at Navigator, Canada’s leading strategic advisory firm.

Ms. Pearson has served on the boards of the Independent Electricity System Operator, the National Ballet of Canada and the Wellspring Cancer Support Foundation. Ms. Pearson holds a Master of Arts in Ontario Public Policy Analysis and Canadian Politics from McMaster University and a Bachelor of Arts in Political Science and French from Bishop’s University.

Megan Telford – Chief Operating Officer

Megan Telford is the Chief Operating Officer at Hydro One Limited and Hydro One Inc., a role she assumed in July 2025. Ms. Telford is responsible for construction and project delivery, distribution operations, customer experience, safety, customer and regulatory strategy, planning, key accounts, partnerships, sustainability, growth, Hydro One Remote Communities, Ivy Charging Network, and Aux Energy Inc. Ms. Telford is a highly regarded and passionate business leader with a reputation for building trust and strong partnerships.
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Ms. Telford previously held the roles of Executive Vice President, Strategy and Energy Transition from February 2025 to July 2025, and Executive Vice President, Strategy, Energy Transition, and Human Resources from April 2023 to February 2025. Prior to that, Ms. Telford was the Chief Human Resources Officer at Hydro One Networks, a role she assumed in September 2020. In August 2022, Ms. Telford assumed responsibility for the Health, Safety and Environment teams and in September 2022, Ms. Telford also assumed interim responsibility for the Corporate Affairs and Customer Care teams. Before joining Hydro One in 2020, Ms. Telford led Human Resources at Toronto Dominion Insurance (TDI) from 2019 to 2020, and a number of increasingly senior roles at TD Bank since 2007. Prior to TD, Ms. Telford practised labour and employment law at a national law firm and worked at the Permanent Court of Arbitration in The Hague. Ms. Telford currently serves on the board of directors for Export Development Canada as well as the Electricity Distributors Association.

Ms. Telford holds an Honours Bachelor of Arts in Industrial Relations from McMaster University, a Master of Industrial Relations and Juris Doctor from Queen’s University and she was a law clerk for Justices Stone and Strayer at the Federal Court of Appeal. She holds her ICD.D from the Institute of Corporate Directors.

Gillian Whitebread – Executive Vice President, Head of Human Resources

Gillian Whitebread is the Executive Vice President, Head of Human Resources of Hydro One Limited and Hydro One Inc., a position she assumed in February 2025. In this role, Ms. Whitebread is responsible for all aspects of the human resources organization at Hydro One. She is accountable for overseeing human resource practices and operations to meet the needs of the evolving business, specifically in the areas of talent management, employee and labour relations, diversity and inclusion, human resources shared services, total rewards and human capital management. She is also responsible for transformation and broadband enablement, inclusive of the business of Acronym Solutions Inc.

Before joining Hydro One, Ms. Whitebread was employed as an independent executive advisor from 2024 to 2025. Prior to that, Ms. Whitebread held the Chief Human Resources Officer role at Telus Health (formerly LifeWorks and Morneau Shepell) from 2018 to 2023, and a series of progressively senior roles at the Canadian Imperial Bank of Commerce from 2002 to 2018, including Vice President, Human Resources, Technology and Operations, Client Connectivity and Innovation.

Ms. Whitebread serves as a Board of Trustees Member, Chair of the Human Resources Committee and Member of the Finance and Audit Committee for the McMichael Art Gallery. She is also passionate about education and developing the next generation of talent. She has taught in the post graduate Human Resources Program at Centennial College, is an Executive in Residence at the Richard Ivey School of Business at the University of Western Ontario, and sits on the Board of Governors and Chairs the People & Culture Committee at an independent school. Ms. Whitebread holds a Bachelor of Commerce from Queen’s University and a Master of Business Administration with Distinction from the Richard Ivey School of Business at the University of Western Ontario. She is a Certified Human Resources
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Professional and a Certified Human Resources Leader. She has also completed the Board Human Resources Compensation Committee certifications at the Rotman School of Management at the University of Toronto and at the Harvard Business School at Harvard University.

Melissa Sonberg – Board Chair

Melissa Sonberg is a corporate director and currently serves as chair of Hydro One Limited and Hydro One Inc. Ms. Sonberg was most recently a Professor of Practice at McGill University’s Desautels Faculty of Management, where she was a faculty member from 2014 to 2024. She spent the early part of her career in the healthcare industry before joining Air Canada, where she held leadership positions in a range of customer facing, operational and corporate functions. Ms. Sonberg was part of the founding executive team of Aeroplan, which became part of AIMIA Inc. Ms. Sonberg held positions of Senior Vice President, Human Resources & Corporate Affairs and Senior Vice President, Global Brands, Communications and External Affairs at AIMIA from 2001 to 2013.

Ms. Sonberg sits on the boards of Exchange Income Corporation (TSX), Athennian, Enghouse Systems Inc. (TSX), and Canada Post Corporation. Previous directorships include Via Rail Canada, MD Financial Holdings, Inc., Rideau, Inc., Group Touchette, Women in Capital Markets, the McGill University Health Centre and the Montreal Children’s Hospital Foundation.

Ms. Sonberg holds a Bachelor of Science (Psychology) from McGill University, a Master of Health Administration from the University of Ottawa and holds her ICD.D. She is a Certified Human Resource Executive (CHRE).

David Hay – Member of Indigenous Peoples, Safety & Operations Committee, Member of Audit Committee

David Hay is the Managing Director of Delgatie Incorporated, a strategic advisory firm. He is the former Vice-Chair and Managing Director of CIBC World Markets Inc., a role he held until 2015. From 2004 until 2010, he was President and Chief Executive Officer of New Brunswick Power Corporation. Prior to that Mr. Hay held senior investment banking roles as Senior Vice-President and Director responsible for mergers and acquisitions with Merrill Lynch Canada and Managing Director of European mergers and acquisitions with Merrill Lynch International based in London, England. Mr. Hay spent the early part of his career as a practicing lawyer at Osler, Hoskin & Harcourt LLP and taught at both the University of Toronto and University of New Brunswick. Mr. Hay was a Law Clerk to the Chief Justice of the High Court of the Supreme Court of Ontario from 1981 until 1982.

Mr. Hay also sits on the board of EPCOR Utilities Inc. and he is a member of the Council of Clean and Reliable Energy. Prior directorships include Toronto Hydro-Electric System Limited, where he was Vice Chair, and Associated Electric & Gas Insurance Services Limited (AEGIS). Mr. Hay also chaired both the Beaverbrook Art Gallery and SHAD Canada.

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Mr. Hay holds a Bachelor of Laws from Osgoode Hall Law School, York University and a Bachelor of Arts from the University of Toronto (Victoria College). He is an Executive Fellow of the Ivey Energy and Policy Institute and holds his ICD.D.

Stacey Mowbray – Chair of Human Resources Committee, Member of Audit Committee

Stacey Mowbray is a corporate director, serving on the board of Currency Exchange International/Exchange Bank of Canada (TSX). Prior directorships have included dentalcorp Holdings Ltd (TSX), Sleep Country Canada Holdings Inc. (TSX), Trillium Health Partners, Second Cup Coffee Company, Liquor Control Board of Ontario and the Coffee Association of Canada as Chair.

Ms. Mowbray’s most recent work experience was as President of North America/Americas for Weight Watchers International from 2014 to 2019 and prior to that as President and CEO at The Second Cup Ltd. Ms. Mowbray has extensive strategy and marketing experience from years of leading these functions at high profile brands such as Molson Coors Brewing Company, Cara Operations and Pepsi Cola Canada.

Ms. Mowbray has received numerous recognitions including Diversity Champion, Inaugural CEO in Residence and Top 100 Alumni for Wilfrid Laurier University, Top 100 Women’s Executive Network, and Schulich School of Business Outstanding Progress and Achievement Award. Ms. Mowbray holds a Master of Business Administration from Schulich School of Business, as well as, a Bachelor of Business Administration from Wilfrid Laurier University. Ms. Mowbray holds her ICD.D and recently earned the NACD Certificate in Cyber-Risk Oversight.

Mitch Panciuk – Member of Audit Committee, Member of Indigenous Peoples, Safety & Operations Committee

Mitch Panciuk is the President and CEO of Ontario One Call, and previously served as the Chair of Ontario One Call’s board of directors. Mr. Panciuk served as the Mayor of the City of Belleville from 2018 to 2022, and prior to his election as Mayor, served as a Belleville Ward City Councillor. Under his leadership, the City of Belleville transformed into a destination city leading Eastern Ontario in population growth and in 2021 was the fourth best community in Canada to live as ranked by Maclean’s magazine.

Since 2001, Mr. Panciuk has owned and operated Boston Pizza Belleville, was also a multi-unit operating partner, and had multiple elected terms as an Ontario member of the Boston Pizza International Franchisee Advisory Council.

Mr. Panciuk served on the board of Elexicon Corporation from 2018 to 2022 where he chaired the Audit, Finance and Risk Management Committee.

Mr. Panciuk holds his Chartered Director (C.Dir.) Designation from The Director’s College, DeGroote School of Business, McMaster University and a Bachelor of Arts from the University of Alberta.

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Mark Podlasly – Member of Human Resources Committee, Member of Indigenous Peoples, Safety & Operations Committee

Mark Podlasly, a member of the Cook’s Ferry Indian Band, Nlaka’pamux Nation in British Columbia, is the Chief Executive Officer at the First Nations Major Projects Coalition (the “FNMPC”), a national 184 Indigenous nation collective that seeks ownership of major projects such as pipeline, electric utilities, and mining support infrastructure, as well as improvements in project environmental practices. From 2016 until his appointment as CEO of FNMPC in 2024, Mr. Podlasly held the role of Chief Sustainability Officer.

Mr. Podlasly is a board member of the Canadian Imperial Bank of Commerce (TSX, NYSE) where he serves on the audit and risk management committees, and is chair of the First Nations (Pacific Trails Pipeline) Group Limited Partnership. He is also a Trustee of the Nlaka’pamux Nation Legacy Trust and a member of the Climate Strategy Advisory Board at the Institute of Corporate Directors.

In 2017, Mr. Podlasly was awarded the Governor-General’s Meritorious Service Medal for Indigenous leadership in co-establishing Teach for Canada-Gakinaamaage, a non-profit organization that works with northern First Nations to recruit and support committed teachers.

Mr. Podlasly holds a Master in Public Administration degree from Harvard University as well as a Bachelor of Arts, Business Administration from Trinity Western University. Mr. Podlasly also holds his ICD.D.

Helga Reidel – Chair of Audit Committee, Member of Human Resources Committee

Helga Reidel is a corporate director. Ms. Reidel most recently served as President and Chief Executive Officer of ENWIN Utilities Ltd. from 2016 to 2022. Prior to that, she served as Chief Administrative Officer for the Corporation of the City of Windsor from 2009 to 2016 and brings more than 34 years of senior executive and board director experience in the public and private sectors.

Ms. Reidel currently sits on the board of Corby Spirit and Wine Ltd (TSX) and the Windsor Detroit Bridge Authority. She is also a Founding Member of the Detroit/Windsor/Toledo Arm of the Private Directors Association, where she previously also held the position of Treasurer. She previously sat on the board of Transform SSO, served on the Board of Governors of the University of Windsor, and was a board member of the Audit Committee of WISE Trust, a jointly sponsored pension plan. Ms. Reidel also previously held a number of volunteer appointments, including the United Way Centraide-Windsor Essex, the Windsor Public Library Board, and the Windsor Essex Children’s Aid Society.

Ms. Reidel is a graduate of the University of Windsor with degrees in Commerce and Education. She is a Chartered Professional Accountant (FCPA, FCA), holds her Ontario Certified Teacher designation from the Ontario College of Teachers, and holds her ICD.D.

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Michael Rencheck – Member of Governance & Regulatory Committee

Michael Rencheck is the Executive Vice Chair of Bruce Power. He is an experienced executive and leader in nuclear energy generation. Prior to taking his current role in 2024, Mr. Rencheck previously served as President and CEO of Bruce Power, from 2016 to 2024. Prior to joining Bruce Power, he served as the Deputy Chief Operating Officer for AREVA Group, overseeing its extensive global portfolio of nuclear and renewable projects. Prior to this, he served as President and CEO of AREVA Inc. in North America, leading its diverse nuclear manufacturing and services business in Canada and the United States with a workforce of approximately 5,000 people.

Mr. Rencheck has been recognized by the National Safety Council for his leadership in demonstrating a personal commitment to worker safety and health and was designated by the U.S. Department of Energy as a STEM ambassador. He has been widely recognized for his executive and leadership roles, including being named CEO of the Year in 2020 by the Ontario Chamber of Commerce, Leader of the Year in 2022 by Electricity Human Resources Canada, and Trail Blazer in 2025 by the U.S. Nuclear Industry Council.

Mr. Rencheck is a Professional Engineer and certified senior reactor operator. Mr. Rencheck serves on the board of directors of the Technical Standards and Safety Authority, and is a member of its Safety and Regulatory Affairs Committee. He also sits on the board of directors of Framatome (US). Mr. Rencheck has served on the board of directors of numerous organizations including the Electric Power Research Institute and is active in the communities of Bruce, Grey and Huron counties.

Brian Vaasjo – Chair of Indigenous Peoples, Safety & Operations Committee, Member of Governance & Regulatory Committee

Brian Vaasjo is a corporate director. He was previously President and CEO of Capital Power, a power generation company, a position he had held from Capital Power’s Initial Public Offering in 2009 until May of 2023. Under his leadership, Capital Power became Alberta’s leading developer of new power generation and successfully acquired and developed power generation projects in British Columbia, Ontario, and the United States. Prior to that, Mr. Vaasjo held various positions at EPCOR Utilities including President of EPCOR’s Energy Division and Executive Vice President and Chief Financial Officer commencing in 1998. For 19 years before that, he held various positions with the predecessor companies to Enbridge.

Mr. Vaasjo currently serves on the boards of directors of Covenant Health and Edmonton Global. He previously served on the Capital Power board of directors from 2009 to 2023 and the Capital Power Income LP board of directors from 2005 to 2011, which he chaired from 2009 to 2011. Other directorships have included the Alberta Health Services Board, Shock Trauma Air Rescue Board (STARS) where he served as chairman, and the United Way of the Alberta Region, which he also served as chairman. He currently serves as a Member of the Advisory Council to the Dean of Medicine and Dentistry at the University of Alberta.

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Mr. Vaasjo holds a Bachelor of Education degree and an MBA from the University of Alberta. He is also a Fellow of the Institute of Chartered Professional Accountants (FCPA). 

Susan Wolburgh Jenah – Chair of Governance & Regulatory Committee, Member of Indigenous Peoples, Safety & Operations Committee

Susan Wolburgh Jenah is a corporate director with four decades of experience as a senior regulator, chief executive officer, lawyer and director. Throughout her career, she has served on numerous corporate, Crown corporation and not-for-profit boards and expert advisory committees.

Ms. Wolburgh Jenah currently serves on the board of Aecon Group Inc. (TSX) and is Chair of the Corporate Governance, Nominating and Compensation Committee. She recently served as Vice-Chair of Humber River Hospital and as a member of the Independent Review Committee of Vanguard Investments Canada. Prior directorships include serving as a Public Governor of the U.S. Financial Industry Regulatory Authority, as Chair of the NEO Exchange, and as a director of Laurentian Bank of Canada, Aequitas Innovations, The Global Risk Institute, the Investment Industry Regulatory Organization of Canada (IIROC), and the Institute of Corporate Directors.

Ms. Wolburgh Jenah was the founding President and CEO of IIROC and held numerous executive roles at the Ontario Securities Commission, including Vice-Chair, Acting Chair, General Counsel and Head of International Affairs.

Ms. Wolburgh Jenah holds a Bachelor of Arts from the University of Toronto and a Juris Doctor from Osgoode Hall Law School. She is also a member of the C.D. Howe National Advisory Council and served as Mentor to the Catalyst Women on Board Program. She is a prior Fellow and Adjunct Professor at

Osgoode Hall Law School and recipient of the Osgoode Hall Gold Key for Achievement in 2011. Ms. Wolburgh Jenah holds her ICD.D.

Information Regarding Certain Directors and Executive Officers

As at December 31, 2025, the directors and executive officers of Hydro One Limited beneficially owned, controlled or directed, directly or indirectly, as a group, 37,425 common shares, which represented approximately 0.006% of the outstanding common shares.

As at December 31, 2025, 5 of 7 executive officers of Hydro One Limited, and approximately 47% of the executives (those who hold a vice president role and above or equivalent) (20 out of 43) across Hydro One Limited are women.

Corporate Cease Trade Orders and Bankruptcies

None of the directors or executive officers of Hydro One Limited nor any shareholder holding shares
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sufficient to materially affect control of Hydro One Limited is, or within the last 10 years has served as, a director or executive officer of any company that, during such service or within a year after the end of such service, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

None of the directors or executive officers of Hydro One Limited is, or within the last 10 years has served as, a director, CEO or CFO of any company that, during such service or as a result of an event that occurred during such service, was subject to an order (including a cease trade order, or similar order or an order that denied access to any exemption under securities legislation), for a period of more than 30 consecutive days.

None of the directors or executive officers of Hydro One Limited nor any shareholder holding shares sufficient to materially affect control of Hydro One Limited, within the last 10 years has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.

Penalties or Sanctions

None of the directors or executive officers of Hydro One Limited, nor any shareholder holding shares sufficient to materially affect control of Hydro One Limited, has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Conflicts of Interest

To the best of the Company’s knowledge, there are no existing material potential conflicts of interest among the Company and the directors or executive officers of the Company as a result of their outside business interests as at the date of this annual information form. Certain of the directors and executive officers serve as directors and executive officers of other public companies. Accordingly, conflicts of interest may arise which could influence these persons in evaluating possible acquisitions or in generally acting on behalf of the Company. Where conflicts arise, they are managed through a variety of measures, including declaration of the conflict, recusal from meetings and/or portions of meetings, and the creation of separate board materials for the affected directors.

Indebtedness of Directors and Executive Officers

No director, executive officer, employee, former director, former executive officer or former employee or associate of any director or executive officer of Hydro One Limited or any of its subsidiaries had any
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outstanding indebtedness to Hydro One Limited or any of its subsidiaries except routine indebtedness or had any indebtedness that was the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by Hydro One Limited or any of its subsidiaries.

AUDIT COMMITTEE

The Audit Committee must consist of at least three directors, all of whom are persons determined by Hydro One to be both “independent” (within the meaning of all Canadian securities laws and stock exchange requirements and the Governance Agreement) and “financially literate” (within the meaning of other applicable requirements or guidelines for audit committee service under securities laws or the rules of any applicable stock exchange, including National Instrument 52-110 – Audit Committees). At least one member of the Audit Committee will qualify as an “audit committee financial expert” as defined by the applicable rules of the United States Securities and Exchange Commission. The Audit Committee currently comprises Helga Reidel (Chair)9, David Hay, Stacey Mowbray, and Mitch Panciuk. Each of the audit committee members is independent and financially literate and each has an understanding of the accounting principles used to prepare Hydro One’s financial statements and varied experience as to the general application of such accounting principles, as well as an understanding of the internal controls and procedures necessary for financial reporting. The Board has adopted a written mandate for the Audit Committee, in the form set out under Schedule “A” in this annual information form, which sets out the Audit Committee’s responsibilities. Helga Reidel, David Hay, Stacey Mowbray, and Mitch Panciuk each qualify as an audit committee financial expert.

Relevant Education and Experience

For a description of the relevant education and experience of each member of the Audit Committee, please refer to each member’s profile under “Directors and Officers – Directors and Executive Officers”.

Pre-Approval Policies and Procedures

The Audit Committee Mandate requires that all non-audit services to be provided to Hydro One Limited or any of its subsidiaries by the external auditors or any of its affiliates are subject to pre-approval by the Audit Committee.

9 Helga Reidel was appointed Chair of the Audit Committee effective January 1, 2026.
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Auditors’ Fees

The aggregate fees billable by KPMG LLP to Hydro One Limited and its subsidiaries in respect of professional services for 2025 and 2024 are presented below:

Year ended
December 31, 2025
Year ended
December 31, 2024
Audit Fees(1)
$3,068,268$2,751,176
Audit-Related Fees(2)
$568,638$496,966
Tax Fees(3)
$23,888$21,935
Other Fees(4)
$70,048$65,770
Total$3,730,842$3,335,847

Notes:
(1)The nature of the services rendered were: audit of annual financial statements of the Company and its subsidiaries, statutory and regulatory filings including reporting to the Province and services related to securities offerings.
(2)The nature of services rendered were: translations, audit of the Hydro One Pension Plans, assurance services related to the sustainable financing framework, and services reasonably related to the performance of the audit or review of the Company’s financial statements that are not reported under Audit Fees.
(3)The nature of services rendered was general tax advice and compliance.
(4)The nature of services rendered was accounting training. The 2024 comparative has been re-classified from Audit Related-Fees.

AGREEMENTS WITH PRINCIPAL SHAREHOLDER

Hydro One Limited and the Province have entered into:

•the Governance Agreement on November 5, 2015 to address the Province’s role in the governance of Hydro One Limited, as modified by the Waiver dated June 18, 2025;

•the Registration Rights Agreement on November 5, 2015 to provide the Province with the right to require Hydro One Limited to facilitate future secondary offerings of common shares or preferred shares owned or controlled by the Province on November 5, 2015; and

•the Letter Agreement on July 11, 2018 for the purpose of the orderly replacement of the Board and the retirement of the then CEO.

The Governance Agreement and the Registration Rights Agreement were originally entered into in connection with the completion of the initial public offering of Hydro One Limited in November 2015 and the Letter Agreement was entered into in connection with the retirement of the CEO and replacement of the Board in July 2018. On June 18, 2025, the Company and the Province entered into the Waiver that, among other matters, waived certain requirements in the Governance Agreement. The material terms of each are summarized below. Copies of the Governance Agreement and Waiver, the Registration Rights Agreement and the Letter Agreement have been filed on SEDAR+ and are available under Hydro One Limited’s profile at www.sedarplus.com. The discussion in this annual information form concerning the
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Governance Agreement and Waiver, the Registration Rights Agreement and the Letter Agreement, as the case may be, is not complete, and is qualified in its entirety to the text of the Governance Agreement and Waiver, the Registration Rights Agreement and the Letter Agreement, each of which should be referred to. Not all of the terms of the Governance Agreement and Waiver, the Registration Rights Agreement and the Letter Agreement are described in this annual information form.

Governance Agreement

Governance Matters

The Governance Agreement specifically addresses the following governance matters:

•The governance principles under which Hydro One Limited and its subsidiaries will be managed and operated.

•The nomination of directors, which includes: (i) the requirement for a fully independent board of directors (other than the CEO), and (ii) the maximum number of directors that may be nominated by the Province.

•The election and replacement of directors.

•Approvals requiring a special resolution of the directors.

Governance Principles

The Governance Agreement provides that the business and affairs of Hydro One Limited will be managed and operated in accordance with certain governance principles.

The governance principles provide that:

•Hydro One Limited will maintain corporate governance policies, procedures and practices consistent with the best practices of leading Canadian publicly listed companies, having regard to Hydro One Limited’s ownership structure and the Governance Agreement.

•The board of directors of Hydro One Limited is responsible for the management of the business and affairs of Hydro One Limited.

•With respect to its ownership interest in Hydro One Limited, the Province will engage in the business and affairs of Hydro One Limited as an investor and not a manager, and the Province intends to achieve its policy objectives through legislation and regulation, as it would with respect to any other utility operating in Ontario.

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Nomination of Directors

The Governance Agreement establishes qualification standards for director nominees, provides for the number of directors that may be nominated and establishes a process for confirming nominees. The Governance Agreement recognizes that the Board is to be a fully independent board (independent of both Hydro One and the Province), except the CEO, as described under the subheading “Independence” below.

Director Qualification Standards

Under the Governance Agreement, the Province and the Governance & Regulatory Committee (formerly the Nominating, Corporate Governance, Public Policy & Regulatory Committee and then Governance Committee) have agreed to nominate as directors qualified individuals of high quality and integrity who have the experience, expertise and leadership appropriate to manage a business of the complexity, size and scale of the business of Hydro One Limited, on a basis consistent with the highest standards for directors of Canada’s leading public companies.

In addition, a majority of the directors must be resident Canadians (as defined in the OBCA).

Independence

Each director nominee must, among other things:

•be independent of Hydro One Limited (other than the CEO) within the meaning of Ontario securities laws governing the disclosure of corporate governance practices;

•be independent of the Province (other than the CEO). A director will be independent of the Province if he or she would be independent of Hydro One Limited within the meaning of Ontario securities laws governing the disclosure of corporate governance practices if the Province and each Specified Provincial Entity were treated as Hydro One Limited’s parent under that definition. In addition, he or she may not be an employee or official of the Province or any Specified Provincial Entity, either: (i) currently or (ii) within the last three years; and

•meet the requirements of applicable securities and other laws and any exchange on which the voting securities are listed.

A “Specified Provincial Entity” means (1)(a) the Ontario Financing Authority, (b) the IESO, (c) Ontario Power Generation Inc., (d) the Electrical Safety Authority, (e) Ontario Electricity Financial Corporation, (f) Infrastructure Ontario, or (g) a subsidiary of, or a person controlled by, any organization listed in (a) to (f); and (2) the OEB.

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Number of Directors

Pursuant to the terms of the Governance Agreement, the Board will consist of no fewer than 10 and no more than 15 directors. Pursuant to the Waiver, the Province waived certain requirements of the Governance Agreement in relation to the minimum number of directors, solely in respect of the 2025 annual meeting of shareholders of Hydro One Limited, provided that the number of directors nominated for election at such annual meeting would be at least nine.

Board Nominees

The nominees to be proposed for election to the Board by Hydro One Limited at annual meetings of shareholders will be determined as follows:

•The CEO will be nominated.

•The Province will be entitled to nominate that number of nominees equal to 40% of the number of directors to be elected (rounded to the nearest whole number), subject to certain exceptions.

•The Governance Committee will nominate the remaining directors.

Board Nomination Process

Under the Governance Agreement, the Province and representatives of the Governance & Regulatory Committee are to meet after each annual meeting of shareholders to discuss expected upcoming departures from the Board (whether due to resignation, retirement or otherwise) and the impact such departures will have on the Board, having regard to continued compliance with the Governance Agreement and the ability of the Board to satisfy the Board’s skills matrix, diversity policy and other governance standards. Under the Governance Agreement, at this meeting the Governance & Regulatory Committee is to make recommendations to the Province respecting potential candidates for director, including potential candidates for nomination by the Province. The Province has no obligation to nominate any of the individuals recommended as one of its director nominees.

Not later than 60 days prior to the date by which proxy solicitation materials must be mailed for Hydro One’s annual meeting of shareholders, each of the Province and the Governance & Regulatory Committee will notify the other of its proposed director nominees. If a proposed nominee is not already a director of Hydro One, or is then a director but whose circumstances have materially changed in a way that would affect whether she or he would continue to meet the director qualification standards under the Governance Agreement, then the Province or the committee, as the case may be, will have 10 business days to confirm that nominee or reject that nominee on the basis that the nominee does not meet those director qualification standards.

If a director nominee of the Province or the Governance & Regulatory Committee is rejected, then the
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Province or the committee will be entitled to nominate additional candidates until a nominee is confirmed by the other. If no replacement nominee is confirmed for a director who was expected to depart from the board and that director does not resign, that director shall be re-nominated. The Province and the committee will use commercially reasonable efforts to confirm director nominees prior to the date by which proxy solicitation materials must be mailed for the annual meeting of shareholders.

Election and Replacement of Directors

The Governance Agreement provides for how:

•the Province will vote with respect to director nominees, including its nominees and those of the Governance & Regulatory Committee,

•the Province may vote at contested elections,

•the Province may seek to replace the Board by withholding votes or voting for removal, and

•Board vacancies will be filled.

Voting on Director Elections

At any meeting of shareholders to elect directors, the Province is required to vote in favour of the nominees selected by the Province and the Governance & Regulatory Committee in accordance with the board nomination process set out in the Governance Agreement, except in the case of contested director elections or where the Province seeks to replace the Board in accordance with the Governance Agreement.

Contested Elections

At any meeting of shareholders to elect directors of Hydro One Limited at which there are more nominees for directors than there are directors to be elected, the Province may vote its Voting Securities in its sole discretion (including to vote in favour of other candidates instead of the Province’s nominees), except that the Province will vote in favour of the election of the CEO as a director.

Right to Withhold Votes

The Province is required under the Governance Agreement to vote in favour of all director nominees of Hydro One Limited, subject to the Province’s overriding right to withhold from voting in favour of all director nominees and its right to seek to remove and replace the entire Board, including in each case its own director nominees but excluding the CEO and, at the Province’s discretion, the Chair. Depending on the number of withheld votes a director nominee receives at a meeting of shareholders at which directors are to be elected, that director nominee may be required to tender his or her resignation to the Board in
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accordance with Hydro One Limited’s majority voting policy.

Province’s Right to Replace the Board

The Province may at any time notify Hydro One Limited that it intends to request that Hydro One Limited hold a meeting of shareholders for the purposes removing all of the directors in office, including those nominated by the Province, with the exception of the CEO and, at the sole discretion of the Province, the Chair (a “Removal Notice”). If the Province gives Hydro One a Removal Notice, then the Chair shall coordinate the establishment of an ad hoc nominating committee comprising one representative of each of the five largest beneficial owners of Voting Securities known to the Company (or if at least three such owners are not willing to provide a representative, then the individuals the Province proposes to nominate as replacement directors). The Province and the ad hoc nominating committee will identify and confirm replacement directors to be nominated at the shareholders’ meeting in accordance with the process set out in the Governance Agreement. Each replacement director nominee must meet the same qualification and independence standards under the Governance Agreement as for any director nominee. Hydro One Limited will call the shareholders’ meeting once the replacement director nominees are confirmed pursuant to this process, and will hold the shareholders’ meeting within 60 days of this confirmation. At the shareholders’ meeting, the Province will vote in favour of removing the current directors with the exception of the CEO and, at the Province’s discretion, the Chair, and will vote in favour of the new independent director nominees.

Board Approvals Requiring a Special Resolution of the Directors

The Governance Agreement provides that certain actions require approval by a resolution of the Board passed by at least two-thirds of the votes cast at a meeting of the directors, or consented to in writing by all of the directors (a “Special Board Resolution”). Matters requiring approval by a Special Board Resolution include:

•the appointment and annual confirmation of the Chair,

•the appointment and annual confirmation of the CEO, and

•changes to certain specified governance standards specified in the Governance Agreement to be “Hydro One’s governance standards”.

The governance standards subject to this special approval requirement include the Board’s skills matrix, the Ombudsman’s Mandate, the Diversity Policy and the Majority Voting Policy, the Corporate Governance Guidelines, the mandates of the Board and its committees, position descriptions for the CEO, the Chair, the directors and committee chairs, and the Stakeholder Engagement Policy.

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Other Matters

In addition to the governance matters noted above, the Governance Agreement also addresses the following matters:

•Restrictions on the right of the Province to initiate fundamental changes,

•Pre-emptive rights provided to the Province with respect to future issuances of Voting Securities by Hydro One Limited, and

•Acquisition limits with respect to the Province’s acquisition of outstanding Voting Securities.

Restrictions on Province’s Right to Initiate Fundamental Changes

The Province has agreed not to initiate a fundamental change to Hydro One Limited (as defined in Part XIV of the OBCA), including not to initiate any arrangement or amalgamation involving Hydro One Limited or any amendment to the articles of Hydro One Limited. The Province may, however, vote its Voting Securities as it sees fit in the event any fundamental change is initiated by Hydro One Limited or another shareholder of Hydro One Limited.

Pre-emptive Rights

Hydro One Limited has granted to the Province a pre-emptive right to acquire additional Voting Securities as part of future offerings by Hydro One Limited of Voting Securities. If Hydro One Limited proposes to issue Voting Securities in the future, whether pursuant to a public offering or a private placement, Hydro One Limited must notify the Province of the proposal and provide information in accordance with the provisions of the Governance Agreement at least 30 days in advance and must offer the Province the right to purchase up to 45% of the Voting Securities being offered. Any Voting Securities not purchased by the Province pursuant to the offer may be purchased by any other person pursuant to the proposed offering.

The pre-emptive right also applies with respect to any proposed issuance by Hydro One Limited of securities convertible into or exchangeable for Voting Securities except securities convertible into or exchangeable for Voting Securities: (i) pursuant to certain employee or director compensation plans; (ii) pursuant to any dividend re-investment arrangement of the Company that is consistent with dividend reinvestment arrangements of other publicly traded utilities in Canada (including as to discount rates) and that does not include a cash purchase option; (iii) pursuant to a rights offering that is open to all shareholders of Hydro One Limited; or (iv) pursuant to any business combination, take-over bid, arrangement, asset purchase transaction or other acquisition of assets or securities of a third-party.

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45% Acquisition Limit

The Province has agreed in the Governance Agreement, subject to certain exceptions, not to acquire previously issued Voting Securities if, after that acquisition, the Province would own more than 45% of any class or series of Voting Securities. This restriction does not limit the Province from acquiring Voting Securities on an issuance by Hydro One Limited, including pursuant to the exercise by the Province of its pre-emptive right. See “Agreements with Principal Shareholder – Governance Agreement – Other Matters – Pre-emptive Rights” above.

Registration Rights Agreement

Demand Registration

Pursuant to the Registration Rights Agreement, Hydro One Limited has granted the Province certain demand registration rights providing that, from time to time while the Province is a “control person” of Hydro One Limited within the meaning of applicable Canadian securities laws, the Province can require Hydro One Limited to file, at the expense of the Province (except for internal expenses of Hydro One Limited or other expenses that Hydro One Limited would have incurred in the absence of such a request), and subject to certain exceptions, one or more prospectuses and take other procedural steps as may be reasonably necessary to facilitate a secondary offering in Canada of all or any portion of the common shares or preferred shares (“Shares”) held by the Province.

“Piggy-Back” Registration

If Hydro One Limited proposes to undertake a Canadian public offering by prospectus, the Province is entitled, while it is a “control person” of Hydro One Limited within the meaning of applicable Canadian securities laws, to include Shares owned by it as part of that offering, provided that the underwriters may reduce the number of Shares proposed to be sold if in their reasonable judgment all of the Shares proposed to be offered by Hydro One Limited and the Province may not be sold in an orderly manner within a price range reasonably acceptable to Hydro One Limited. In that case, the Shares to be sold will be allocated pro rata between Hydro One Limited and the Province based on their relative proportionate number of Shares requested to be included in the offering. Hydro One Limited and the Province will share the expenses of the offering (except for internal expenses of Hydro One Limited) in proportion to the gross proceeds they each receive from the offering.

Private Placements

Hydro One Limited has also agreed to use commercially reasonable efforts to assist, at the Province’s expense, the Province in any sale by it of Shares of Hydro One Limited pursuant to an exemption from the prospectus requirements, in the preparation of an offering memorandum and other documentation and by facilitating due diligence by the prospective buyer.

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Customary Agreements

Hydro One Limited and the Province have also agreed to enter into customary agreements, including “lock-up” agreements, on customary market terms in connection with such transactions. Hydro One Limited also agreed to certain indemnification and contribution covenants in favour of the Province and any underwriters involved in such transactions.

Letter Agreement

The Letter Agreement set out the agreement between Hydro One Limited and the Province with respect to the orderly replacement of the Board and the retirement of the then CEO, effective July 11, 2018.

In addition to the above, other key highlights of the Letter Agreement include:

•Hydro One Limited agreed to consult with the Province in respect of future matters of executive compensation; and

•The Province ratified and reaffirmed its obligations under the Governance Agreement and agreed that except as set out in the Letter Agreement, the Letter Agreement did not amend or modify the Governance Agreement and the Governance Agreement remained in full force and effect.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

Other than as noted below and elsewhere in this annual information form, there are no material interests, direct or indirect, of any director or executive officer of the Company, any shareholder that beneficially owns, or controls or directs (directly or indirectly), more than 10% of any class or series of Hydro One Limited’s outstanding voting securities, or any associate or affiliate of any of the foregoing persons, in any transaction within the three most recently completed financial years or during the current financial year, up to the date of this annual information form, that has materially affected or is reasonably expected to materially affect the Company.

Relationships with the Province and Other Parties

Overview

The Province is Hydro One Limited’s principal shareholder. The OEB is the principal regulator of Ontario’s electricity industry. The Province appoints the board members of the OEB and fills any vacancies on the OEB. The OEB is obligated to implement approved directives of the Province concerning general policy and objectives to be pursued by the OEB and other directives aimed at addressing existing or potential abuses of market power by industry participants. The IESO, among other matters, directs the operation of the Ontario power system by balancing supply and demand of electricity and directing electricity flow and assumed the responsibility for forecasting supply and demand of
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electricity over the medium and long term to meet the needs of the province. The board of directors of the IESO, other than its CEO, is appointed by the Province in accordance with the regulations in effect from time to time under the Electricity Act.

In connection with the initial public offering of Hydro One Limited, the Company entered into the Governance Agreement and the Registration Rights Agreement with the Province. Following the election of a new government in Ontario in June 2018, the Company and the Province entered into the Letter Agreement. On June 18, 2025, the Company and the Province entered into the Waiver, whereby the Province waived certain requirements in the Governance Agreement for the articles of Hydro One Limited to at all times provide for a specified minimum and maximum number of directors. Pursuant to the Waiver, the Province also waived certain requirements of the Governance Agreement regarding the minimum number of directors solely in respect of the 2025 annual meeting of shareholders of Hydro One Limited, provided that the number of directors nominated for election at such annual meeting would be at least nine. The Province also acknowledged that it was nominating individuals representing less than 40% of the number of directors to be elected at such 2025 annual meeting of shareholders. See “Agreements with Principal Shareholder”.

Transfer Orders

The transfer orders pursuant to which Hydro One Inc. acquired Ontario Hydro’s electricity transmission, distribution and energy services businesses as of April 1, 1999, did not transfer certain assets, rights, liabilities or obligations where the transfer would constitute a breach of the terms of any such asset, right, liability or obligation or a breach of any law or order (the “trust assets”). The transfer orders did not transfer title to assets located on Reserves, which assets are held by OEFC. See the Annual MD&A under the subheading “Risk Management and Risk Factors – Risks Relating to Hydro One’s Business – Risk from Transfer of Assets Located on Reserves” for more information.

Until it has obtained all consents necessary to complete the transfer of title to these assets to Hydro One, Hydro One is obligated under the transfer orders to manage both the trust assets and the assets otherwise retained by OEFC that relate to Hydro One’s businesses. Hydro One has entered into an agreement with OEFC under which it is obligated, in managing these assets, to take instructions from OEFC if Hydro One’s actions could have a material adverse effect on OEFC. OEFC has retained the right to take control of and manage the assets, although it must notify and consult with Hydro One before doing so and must exercise its powers relating to the assets in a manner that will facilitate the operation of Hydro One’s businesses. The consent of OEFC is also required prior to any disposition of these assets.

The Province also transferred officers, employees, assets, liabilities, rights and obligations of Ontario Hydro in a similar manner to its other successor transferees. These transfer orders include a dispute resolution mechanism to resolve any disagreement among the various transferees with respect to the transfer of specific assets, liabilities, rights or obligations.

The transfer orders do not contain any representations or warranties from the Province or OEFC with
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respect to the transferred officers, employees, assets, liabilities, rights and obligations. Furthermore, under the Electricity Act, OEFC was released from liability in respect of all assets and liabilities transferred by the transfer orders, except for liability under Hydro One’s indemnity from OEFC. The parties, with the consent of the Minister of Finance, agreed to terminate such indemnity effective October 31, 2015. By the terms of the transfer orders, each transferee indemnifies OEFC with respect to any assets and liabilities related to that transferee’s business not effectively transferred, and is obligated to take all reasonable measures to complete the transfers where the transfers were not effective.

Hydro One has indemnified OEFC in respect of the damages, losses, obligations, liabilities, claims, encumbrances, penalties, interest, taxes, deficiencies, costs and expenses arising from matters relating to the Company’s business and any failure by Hydro One to comply with its obligations to OEFC under agreements dated as of April 1, 1999. These obligations include obligations to employ the employees transferred to Hydro One under the transfer orders, make and remit employee source deductions (including tax withholding amounts, and employer contributions), manage the real and personal properties which OEFC continues to hold in trust or otherwise and take any necessary action to transfer all of these properties to the Company, to pay realty taxes and other costs, provide access to books and records and to assume other responsibilities in respect of the assets held by OEFC in trust for the Company.

MATERIAL CONTRACTS

The following are the only material contracts, other than those contracts entered into in the ordinary course of business, which Hydro One Limited has entered into since the beginning of the last financial year, or entered into prior to such date but which contract is still in effect:

(a)the Governance Agreement, described under “Agreements with Principal Shareholder”, as amended by the Waiver;

(b)the Registration Rights Agreement, described under “Agreements with Principal Shareholder”;

(c)the Letter Agreement, described under “Agreements with Principal Shareholder”;

(d)the indenture (the “HOL Indenture”) dated as of October 15, 2020 between Hydro One Limited and Computershare Trust Company of Canada, providing for the creation and issuance of, from time to time, of debt securities, to be issued in one or more series; and

(e)a first supplemental indenture dated as of October 15, 2020 relating to the issuance of the 1.41% Notes in an unlimited aggregate principal amount, of which $425,000,000 was drawn down on October 15, 2020, pursuant to the HOL Indenture.

Copies of the foregoing material agreements have been filed with the Canadian securities regulatory authorities and are available on SEDAR+ at www.sedarplus.com. As of the date of this annual information form, HOHL has not issued any debt securities pursuant to the trust indenture dated as of
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June 8, 2018 between HOHL, as issuer, HOL, as guarantor, Computershare Company, N.A., as United States trustee, and Computershare Trust Company of Canada, as Canadian trustee (the “HOHL Senior Debt Indenture”). Accordingly, the HOHL Senior Debt Indenture is not considered a material agreement. If and when such debt securities are issued pursuant to the HOHL Senior Debt Indenture, such agreement may be considered a material agreement.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

The Company is from time to time involved in legal proceedings of a nature considered normal to its business. Except as disclosed below, Hydro One believes that none of the litigation in which it is currently involved, or has been involved since the beginning of the most recently completed financial year, individually or in the aggregate, is material to its consolidated financial condition or results of operations. The Company is not subject to any material regulatory actions.

In connection with the reorganization of Ontario Hydro, Hydro One Inc. and certain of its subsidiaries succeeded Ontario Hydro as party to various pending legal proceedings relating to the businesses, assets, real estate and employees transferred to them. Hydro One Inc. and certain of its subsidiaries also assumed responsibility for future claims relating to the businesses, assets, real estate and employees acquired by them respectively and arising out of events occurring prior to, as well as after, April 1, 1999. In addition to claims assumed by the Company, it is, from time to time, named as a defendant in legal actions arising in the normal course of business. There are currently no actions that are outstanding which are expected to have a material adverse effect on the Company.

See the Annual MD&A under the heading “Risk Management and Risk Factors – Risks Relating to Hydro One’s Business – Litigation Risks” for more information.

INTEREST OF EXPERTS

KPMG LLP, Chartered Professional Accountants, located at 333 Bay Street, Suite 4600, Bay Adelaide Centre, Toronto, Ontario M5H 2S5, is the auditor of Hydro One Limited and has audited the consolidated financial statements of Hydro One Limited as at and for the years ended December 31, 2025 and 2024. KPMG LLP has confirmed that it is independent of Hydro One Limited within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation, and also that they are independent accountants with respect to Hydro One Limited under all relevant U.S. professional and regulatory standards.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for Hydro One Limited’s common shares is Computershare Trust Company of Canada at its principal office in Toronto, Ontario.

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ADDITIONAL INFORMATION

Additional information relating to Hydro One Limited may be found on SEDAR+ at www.sedarplus.com. Additional information, including with respect to directors’ and officers’ remuneration and indebtedness, principal holders of Hydro One Limited’s securities and shares authorized for issuance under equity compensation plans, is contained in the Company’s management information circular for its most recent annual meeting of shareholders that involves the election of directors.

Additional financial information is provided in the Annual MD&A and in the consolidated financial statements and notes thereto of Hydro One Limited for 2025.
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SCHEDULE “A”
HYDRO ONE LIMITED
AUDIT COMMITTEE MANDATE

The Audit Committee (the “Committee”) of Hydro One Limited (including its subsidiaries, the “Company”) focuses on oversight of the overall quality of the financial reporting, auditing, accounting and internal accounting control matters of the Company and the related required disclosures.

Purpose

The Committee, as a standing Committee appointed by the board of directors of the Company (the “Board”), assists the Board in fulfilling its oversight responsibilities. The Committee’s principal responsibilities include overseeing:

(a)the external audit process and the independence, qualification, appointment, performance and compensation of the external auditors;

(b)the internal audit, accounting, accounting controls and finance processes, including the work and performance of the internal finance, accounting and audit functions;

(c)the integrity of the Company’s financial statements and financial reporting processes, including the audit process and the Company’s internal control over financial reporting and disclosure controls and procedures;

(d)the Company’s compliance with the applicable legal and regulatory requirements relating to accounting, auditing and internal control matters, including the procedures for managing the key risks associated with and any complaints relating to accounting, internal accounting controls or auditing matters; and

(e)the adequacy and quality of the Company’s cyber security and information technology systems, policies and programs.

Responsibilities

The principal responsibilities of the Committee are set out below.

External & Internal Auditors

Selection & Oversight of the External Auditors

1.Review and approve the terms of engagement and, if the shareholders authorize the Board to do so, the compensation to be paid by the Company to the external auditors with respect to the
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conduct of the annual audit. The external auditors are ultimately accountable to the Committee and the Board as the representatives of the shareholders of the Company and will report directly to the Committee and the Committee will so instruct the external auditors. The Committee has the authority to communicate with the external auditors directly.

2.Oversee and evaluate the selection, work, quality of service, professionalism and performance of the external auditors, including having authority to terminate the external auditors, and make recommendations to the Board on the appointment or reappointment of the external auditors of the Company to be proposed for shareholder approval.

3.If a change in external auditors is proposed by the Committee or management of the Company, the Committee will review the reasons for the change and any other significant issues related to the change, including the response of the incumbent external auditors, and enquire of the qualifications of the proposed external auditors before making its recommendation to the Board.

4.Review and approve policies and procedures for the pre-approval of services to be rendered by the external auditors. All permissible non-audit services to be provided to the Company by the external auditors or any of their affiliates that are not covered by pre-approval policies and procedures approved by the Committee will be subject to pre-approval by the Committee. The Committee will have the sole discretion to prohibit the external auditors from providing certain non-audit services to the Company. The Committee will also review and approve disclosures with respect to permissible non-audit services.

5.Oversee and review the independence, objectivity and professional skepticism of the external auditors and make recommendations to the Board on appropriate actions to be taken to protect and enhance the independence, objectivity, and professional skepticism of the external auditors. In connection with such review, the Committee will:

(a)actively engage in a dialogue with the external auditors about all relationships or services that may impact the objectivity and independence of the external auditors, including whether there are any disputes, restrictions or limitations placed on their work;

(b)obtain from external auditors at least annually, a formal written statement delineating all relationships between the Company and the external auditors and its affiliates;

(c)ensure the rotation of the lead (and concurring) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by applicable law or professional practice; and

(d)consider the auditor independence standards promulgated by applicable auditing professional and regulatory bodies.

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6.Review and approve policies for the hiring by the Company of partners, employees, former partners or former employees of the current or former external auditors.

7.Require the external auditors to provide to the Committee, and receive, review and discuss with the external auditors, all notices and reports which the external auditors are required to provide to the Committee or the Board under the rules, policies or practices of professional or regulatory bodies applicable to the external auditors, and any other reports which the Committee may require. Such reports will include:

(a)a description of the external auditors’ internal quality-control procedures, any material issues respecting the external auditors raised by the most recent internal quality-control review, peer review or review body with auditing oversight responsibility over the external auditors, or by any inquiry or investigation by professional or regulatory authorities, within the preceding five (5) years, respecting one or more independent audits carried out by the external auditors, and any steps taken to address any such issues; and

(b)a report describing: (i) the proposed audit plan and approach; (ii) all critical accounting policies and practices to be used by the Company; (iii) all alternative treatments of financial information within generally accepted accounting principles applicable to the Company related to material items that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditors; and (iv) other material written communication between the external auditors and management, such as any management letter or schedule of unadjusted differences.

8.Meet periodically with the external auditors to review their audit plan for the year, its general scope and approach, progress of their activities, any significant findings stemming from the external audit, any changes required in the planned scope of their audit plan, whether there are any disputes or any restrictions or limitations on the external auditors and other material audit activities.

9.Oversee and review the experience and qualifications of the audit team and review the work and performance of the external auditors, including assessing their effectiveness and quality of service, annually and, every five (5) years, perform a comprehensive review of the performance of the external auditors over multiple years to provide further insight on the audit firm, its independence and application of professional standards.

Appointment & Oversight of Internal Auditors

10.Oversee, review and approve the appointment, terms of engagement, compensation, replacement and/or dismissal of the internal auditors. When the internal audit function is performed by employees of the Company, the Committee may delegate responsibility to management for
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approving the employment, terms of employment, compensation and termination of employees engaged in such function other than the head of the Company’s internal audit function.

11.Meet periodically with the internal auditors to review and approve their audit plan for the year, its general scope and approach, progress of their activities, any significant findings stemming from internal audits, any changes required in the planned scope of their audit plan, whether there are any disputes or any restrictions or limitations on the internal audit and other material audit activities.

12.Review summaries of the significant reports to management prepared by the internal auditors, or the actual reports if requested by the Committee, and management’s responses to such reports.

13.Communicate with, as it deems necessary, the internal auditors with respect to their reports and recommendations, the extent to which prior recommendations have been implemented and any other matters that the internal auditors bring to the attention of the Committee. The head of the internal audit function will have unrestricted access to the Committee.

14.Evaluate annually or more frequently as the Committee deems necessary, the internal audit function, including its activities, organizational structure, independence, objectivity and the qualifications, effectiveness and adequacy of the function.

15.Discuss with the internal auditors any key issues identified by the internal auditors.

Oversight & Review of Accounting Principles & Practices

16.Oversee, review and discuss with management, the external auditors and the internal auditors (together and separately, as it deems necessary), among other items and matters:

(a)the integrity, quality, appropriateness and acceptability of the Company’s accounting principles, practices and policies used in its financial reporting, their consistency from period to period, changes in the Company’s accounting principles or practices or critical accounting estimates and the application of particular accounting principles and disclosure practices by management to new transactions or events;

(b)all significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effects of alternative methods within generally accepted accounting principles applicable to the financial statements and any “second opinions” sought by management from an external auditor with respect to the accounting treatment of a particular item;

(c)any material changes to the Company’s auditing and accounting principles or practices or critical accounting estimates as recommended by management, the external auditors or
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the internal auditors or which may result from proposed changes to applicable generally accepted accounting principles and practices;

(d)the extent to which any changes or improvements in accounting or financial practices, as approved by the Committee, have been implemented;

(e)any reserves, accruals, provisions or estimates that may have a material effect upon the financial statements of the Company;

(f)the use of any “pro forma” or “adjusted” financial information, forecasts, projections or other financial measures which are not in accordance with applicable generally accepted accounting principles;

(g)the effect of regulatory and accounting initiatives and changes thereto on the Company’s financial statements and other financial disclosures; and

(h)legal matters, claims and contingencies that are reasonably expected to have a significant impact on the Company’s financial statements or other financial disclosures.

17.Review and resolve disagreements between management and the external auditors regarding financial reporting or the application of any accounting principles or practices.

Oversight & Monitoring of Internal Controls

18.Oversee, review and discuss with management, the external auditors and the internal auditors (together and separately, as it deems necessary):

(a)the adequacy and effectiveness of the Company’s internal control over financial reporting (“ICFR”) and disclosure controls and procedures (“DC&P”) designed to ensure compliance with applicable laws and regulations and the Company’s policies and procedures;

(b)any significant deficiencies or material weaknesses in ICFR or DC&P, and management’s plans for their remediation;

(c)the adequacy of the Company’s internal controls and any related significant findings and recommendations of the external auditors and internal auditors, together with management’s responses thereto; and

(d)management’s compliance with the Company’s policies, processes, procedures and internal controls.

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Oversight & Monitoring of Financial Reporting & Disclosures

19.Review with the external auditors and management and recommend to the Board for approval the audited annual financial statements and unaudited interim financial statements, and the notes and managements’ discussion and analyses accompanying all such financial statements, the Company’s annual report and any other disclosure documents or regulatory filings containing, derived from or accompanying financial information of the Company, prior to the release of any financial results or the filing of such reports with applicable regulators.

20.Review and discuss earnings press releases prior to their distribution, as well as financial information and earnings guidance prior to public disclosure, it being understood that such discussions may, in the discretion of the Committee, be done generally (i.e., by discussing the types of information to be disclosed and the type of presentation to be made).

21.Review with management and oversee the adequacy of the Company’s DC&P and material changes to the design of the Company’s DC&P.

22.Meet with management to review the adequacy of the processes and systems in place for ensuring the accuracy and reliability of public disclosure documents that contain audited and unaudited financial information.

Oversight of Finance Matters

23.Periodically review matters pertaining to the Company’s material policies and practices respecting cash management and material financing strategies or policies or proposed financing arrangements and objectives of the Company.

24.Periodically review the Company’s major financial, capital, accounting, audit and internal control risk exposures (including foreign exchange and interest rate) and management’s initiatives to manage such exposures, including the use of financial derivatives and hedging activities.

25.Review and discuss with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), leases and other relationships of the Company with unconsolidated entities or related parties, that may have a material current or future effect on the Company’s financial condition, results of operations, liquidity, capital resources, capital reserves, or significant components of revenues or expenses.

26.Review and discuss with management the Company’s effective tax rate, adequacy of tax reserves, tax payments and reporting of any pending tax audits or assessments, and material tax policies and tax planning initiatives.

27.Review the organizational structure of the finance function and satisfy itself as to the
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qualifications, effectiveness and adequacy of the function.

28.Review on an annual basis reports on the expense accounts of the Chief Executive Officer and his or her direct reports.

Whistleblower Policy & Fraud Risk Management Programs

29.Oversee the establishment and maintenance of and review and recommend to the Board for approval changes to the procedures for:

(i)the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters (collectively, “Accounting and Auditing Matters”); and

(ii)the confidential, anonymous submission of concerns regarding questionable Accounting and Auditing Matters, including under the Whistleblower Policy.

30.Oversee management’s monitoring of and compliance with and the investigation of complaints regarding Accounting and Auditing Matters under the Whistleblower Policy.

31.Oversee the Company’s Fraud Risk Assessment Management Program, including the adequacy and completeness of the process for identifying and assessing Accounting and Auditing Matters facing the Company, and monitor management’s compliance with that program.

32.Review the adequacy and effectiveness of Accounting and Auditing Matters under the Whistleblower Policy and Fraud Risk Assessment Management Program and oversee management’s corrective programs and measures to address any deficiencies identified therein.

Cyber Security & Information Technology

33.Receive and review reports from management on (i) the Company’s cyber security, data privacy, information technology, policies and programs, and (ii) management’s progress on implementing any major information technology system or program changes, together with any material changes.

34.Oversee the sufficiency and quality of resources for the management of significant cyber security, data privacy and information technology related risks and measures taken to protect the security and integrity of the Company’s management information systems and its customer and supplier data.

35.Review (i) management’s preparedness for crisis response and communications plan with respect to cyber security, data privacy and information technology events, breaches, incidents or matters
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and (ii) actual incidents, breaches or investigations related to cyber security, data privacy and information technology.

Risk Management

36.Meet with the head of the Company’s Enterprise Risk Management function not less than once annually to discuss the risks assigned to the Committee and the adequacy and completeness of management’s programs and processes for identifying, assessing and managing such risks.

General

Policies

37.The Committee is responsible for reviewing and approving, or reviewing and recommending to the Board for approval, the policies listed on Appendix “A”.

38.The committee is responsible for reviewing and recommending to the Governance & Regulatory Committee any proposed amendments to this Mandate.

Procedures

39.Number and Appointment of Members – The members of the Committee will be appointed by the Board annually and each member of the Committee will remain on the Committee until his or her successor is duly appointed or upon his or her earlier resignation or removal in accordance with this Mandate. The Committee will be composed of not less than three (3) Board members, each of whom shall be “independent” as defined in National Instrument 52-110- Audit Committees (as amended, revised or replaced from time to time, “NI 52 110”), subject to the exceptions of NI 52-110.

40.Financial Literacy – Each member must be “financially literate” within the meaning of the applicable requirements or guidelines for audit committee service under securities laws or the rules of any applicable stock exchange, including NI 52-110. At least one member will otherwise qualify as an “audit committee financial expert” as defined by applicable rules of the United States Securities and Exchange Commission.

41.Cross-Appointment – No member may serve on the audit committee of more than two other public companies, unless the Board has determined that such simultaneous service would not impair the ability of the member to serve effectively on the Committee.

42.Removal, Replacement and Vacancy of Committee Members – Any member of the Committee may be removed or replaced at any time by the Board and will automatically cease to be a member of the Committee upon ceasing to be a director. The Board will fill any vacancy if
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the membership of the Committee is less than three (3) directors. Whenever there is a vacancy on the Committee, the remaining members may exercise all of its powers if a quorum remains in office.

43.Committee Chair – Unless a Chair of the Committee is designated by the Board, the members of the Committee may designate a Chair by majority vote of the Committee. If the Committee Chair is not present at any meeting of the Committee, one of the other members of the Committee who is present will be chosen by the Committee to preside at the meeting. The Committee Chair will be responsible for carrying out the duties and responsibilities prescribed for Committee Chairs in the Company’s Position Description for Committee Chairs.

44.Meetings – The Committee will meet regularly and as often as it deems necessary to perform the duties and discharge its responsibilities as described herein in a timely manner, but not less than four (4) times a year. The Committee will maintain written minutes of its meetings, which will be filed with the Company’s corporate minute books.

45.Separate In Camera Meetings – The Committee will meet at each meeting of the Committee without management or non-independent directors present, unless otherwise determined by the Committee Chair.

46.Reliance – Absent actual knowledge to the contrary (which must be promptly reported to the Board), each member of the Committee will be entitled to rely on: (a) financial statements of Hydro One represented to him or her by an officer of Hydro One or in a written report of the external auditors of Hydro One to present fairly the financial position of Hydro One in accordance with generally accepted accounting principles; (b) an interim or other financial report of Hydro One represented to him or her by an officer of Hydro One to present fairly the financial position of Hydro One in accordance with generally accepted accounting principles; and (c) a report or advice of an officer or employee of Hydro One, where it is reasonable in the circumstances to rely on the report or advice; and (d) a report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by any such person.

Approved by the Board on November 7, 2024, to take effect from January 1, 2025.
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HYDRO ONE LIMITED
MANAGEMENT’S REPORT
The Consolidated Financial Statements, Management’s Discussion and Analysis (MD&A) and related financial information have been prepared by the management of Hydro One Limited (Hydro One or the Company). Management is responsible for the integrity, consistency and reliability of all such information presented. The Consolidated Financial Statements for the year ended December 31, 2025 and accompanying notes thereto (together, the Consolidated Financial Statements) have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) and applicable securities legislation. The MD&A has been prepared in accordance with National Instrument 51-102.
The preparation of the Consolidated Financial Statements and information in the MD&A involves the use of estimates and assumptions based on management’s judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. Estimates and assumptions are based on historical experience, current conditions and various other assumptions believed to be reasonable in the circumstances, with critical analysis of the significant accounting policies followed by the Company as described in Note 2 to the Consolidated Financial Statements. The preparation of the Consolidated Financial Statements and the MD&A includes information regarding the estimated impact of future events and transactions. The MD&A also includes information regarding sources of liquidity and capital resources, operating trends, risks and uncertainties. Actual results in the future may differ materially from the present assessment of this information because future events and circumstances may not occur as expected.
Management is responsible for establishing and maintaining adequate disclosure controls and procedures and internal control over financial reporting as described in the annual MD&A. Management evaluated the effectiveness of the design and operation of disclosure controls and procedures, and internal control over financial reporting based on the framework and criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective at a reasonable level of assurance as at December 31, 2025. As required, the results of that evaluation were reported to the Audit Committee of the Hydro One Board of Directors.
The Consolidated Financial Statements have been audited by KPMG LLP, an independent registered public accounting firm appointed by the shareholders of the Company. The external auditors’ responsibility is to express their opinion on whether the Consolidated Financial Statements are fairly presented in all material respects in conformity with U.S. generally accepted accounting principles. The Report of Independent Registered Public Accounting Firm outlines the scope of their examination and their opinion.
The Hydro One Board of Directors, through its Audit Committee, is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control over financial reporting and disclosure. The Audit Committee of Hydro One met periodically with management, the internal auditors and the external auditors to satisfy itself that each group had properly discharged its respective responsibility with respect to the Consolidated Financial Statements before recommending approval by the Board of Directors. The external auditors had direct and full access to the Audit Committee, with and without the presence of management, to discuss their audit findings.

On behalf of Hydro One’s management:
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David Lebeter  Harry Taylor
President and Chief Executive Officer  Executive Vice President, Chief Financial and Regulatory Officer



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HYDRO ONE LIMITED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Hydro One Limited:

Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Hydro One Limited (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations and comprehensive income, changes in equity, and cash flows for each of the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of Regulatory Assets and Liabilities and the impact of rate regulation on the consolidated financial statements
As discussed in Note 2 to the consolidated financial statements, the Company accounts for its regulated operations in accordance with Financial Accounting Standards Board Accounting Standard Codification Topic 980, Regulated Operations (ASC 980). Under ASC 980, the actions of the Company’s regulator may result in the recognition of revenue and costs in time periods that are different than non-rate-regulated enterprises. When this occurs, the Company records incurred and allowed costs that it has assessed are probable of recovery in future electricity rates as regulatory assets or property, plant and equipment. Obligations imposed or probable to be imposed by the regulator to refund previously collected revenue or expenditure of revenue collected from customers on future costs are recorded as regulatory liabilities. As disclosed in Note 11 to the consolidated financial statements, as of December 31, 2025, the Company’s regulatory assets were $3,867 million and regulatory liabilities were $1,851 million.
We identified the evaluation of regulatory assets and liabilities and the impact of rate regulation as a critical audit matter. Accounting for regulated operations under ASC 980 affects multiple financial statement accounts and disclosures in the Company’s consolidated financial statements. Assessing the accounting for regulated operations requires significant auditor judgment due to interpretations of regulatory decisions and judgments involved in evaluating the Company’s assessment of the probability associated with recovery of regulatory assets and imposition of regulatory liabilities.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and implementation and tested the operating effectiveness of certain internal controls over the Company’s regulatory accounting process. This included controls over the evaluation of the probability of (1) the recovery in future rates of costs deferred as regulatory assets, and (2) a refund of previously collected revenue or expenditure of revenue collected from customers on future costs that should be reported as regulatory liabilities, and controls over the monitoring and evaluation of regulatory developments that may affect the probability of recovering costs in future rates or imposing of regulatory liabilities. We evaluated the Company’s assessment of the probability of recovery of the carrying amount for a selection of regulatory assets and for the imposition of a

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HYDRO ONE LIMITED
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
selection of regulatory liabilities, through consideration of selected regulatory proceedings, decisions and accounting orders. For a selection of regulatory proceedings, decisions and accounting orders, we read the Company’s assessment and interpretations. For a selection of regulatory assets and liabilities, we recalculated the amounts recorded based on methodologies approved by the regulator and agreed the data used in the calculations to the Company’s underlying books and records. We compared the amounts calculated by the Company to the amounts recorded in the consolidated financial statements.

/s/ KPMG LLP

Chartered Professional Accountants, Licensed Public Accountants

We have served as the Company’s auditor since 2008.

Toronto, Canada
February 12, 2026


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HYDRO ONE LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the years ended December 31, 2025 and 2024

Year ended December 31 (millions of Canadian dollars, except per share amounts)
20252024
Revenues
Distribution (includes $447 related party revenues; 2024 - $427) (Note 27)
6,557 6,175 
Transmission (includes $2,390 related party revenues; 2024 - $2,254) (Note 27)
2,429 2,269 
Other (Note 27)
55 40 
9,041 8,484 
Costs
Purchased power (includes $3,036 related party costs; 2024 - $2,705) (Note 27)
4,486 4,143 
Operation, maintenance and administration (Note 27)
1,206 1,308 
Depreciation, amortization and asset removal costs (Note 4)
1,111 1,066 
   6,803 6,517 
Income before financing charges, equity income and income tax expense2,238 1,967 
Financing charges (Note 5)
679 621 
Equity income (Note12)
9 — 
Income before income tax expense1,568 1,346 
Income tax expense (Note 6)
219 181 
Net income 1,349 1,165 
Other comprehensive income (loss) 3 (9)
Comprehensive income 1,352 1,156 
Net income attributable to:
    Noncontrolling interest (Note 26)
10 9 
    Common shareholders1,339 1,156 
1,349 1,165 
Comprehensive income attributable to:
    Noncontrolling interest (Note 26)
10 9 
    Common shareholders1,342 1,147 
1,352 1,156 
Earnings per common share (Note 24)
    Basic$2.23$1.93
    Diluted$2.23$1.92
Dividends per common share declared (Note 23)
$1.31$1.24


See accompanying notes to Consolidated Financial Statements.



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HYDRO ONE LIMITED
CONSOLIDATED BALANCE SHEETS
At December 31, 2025 and 2024

As at December 31 (millions of Canadian dollars)
20252024
Assets
Current assets:
Cash and cash equivalents549 716 
Accounts receivable (Note 7)
1,083 911 
Due from related parties409 325 
Other current assets (Note 8)
133 165 
2,174 2,117 
Property, plant and equipment (Note 9)
31,450 29,093 
Other long-term assets:
Regulatory assets (Note 11)
3,857 3,503 
Deferred income tax assets (Note 6)
135 127 
Intangible assets (Note 10)
654 661 
Goodwill 378 373 
Other assets (Note 12)
1,023 808 
6,047 5,472 
Total assets39,671 36,682 
Liabilities
Current liabilities:
Short-term notes payable (Notes 15 & 17)
100 200 
Long-term debt payable within one year (Notes 15, 16 & 17)
925 1,150 
Accounts payable and other current liabilities (Note 13)
2,086 1,809 
Due to related parties479 342 
3,590 3,501 
Long-term liabilities:
Long-term debt (Notes 15, 16 & 17)
18,092 16,329 
Regulatory liabilities (Note 11)
1,621 1,476 
Deferred income tax liabilities (Note 6)
1,799 1,452 
Other long-term liabilities (Note 14)
1,823 1,751 
23,335 21,008 
Total liabilities26,925 24,509 
Contingencies and Commitments (Notes 29 & 30)
Subsequent Events (Note 32)
Noncontrolling interest subject to redemption (Note 26)
19 19 
Equity
Common shares5,721 5,713 
Additional paid-in capital25 28 
Retained earnings6,911 6,360 
Accumulated other comprehensive loss(9)(12)
Hydro One shareholders’ equity12,648 12,089 
Noncontrolling interest (Note 26)
79 65 
Total equity12,727 12,154 
39,671 36,682 

See accompanying notes to Consolidated Financial Statements.

On behalf of the Board of Directors:
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Melissa SonbergHelga Reidel
Chair  Chair, Audit Committee

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HYDRO ONE LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31, 2025 and 2024



Year ended December 31, 2025
(millions of Canadian dollars)


Common
Shares
Additional Paid-in
Capital

Retained Earnings		Accumulated
Other
Comprehensive
Loss		 
Hydro One Shareholders’ Equity
Non-controlling Interest
(Note 26)


Total
Equity
January 1, 2025
5,713 28 6,360 (12)12,089 65 12,154 
Net income — — 1,339 — 1,339 8 1,347 
Other comprehensive income— — — 3 3 — 3 
Distributions to noncontrolling interest (Note 26)
— — — — — (10)(10)
Contributions from sale of noncontrolling interest— — — — — 16 16 
Dividends on common shares (Note 23)
— — (788)— (788)— (788)
Common shares issued8 (8)— — — — — 
Stock-based compensation — 5 — — 5 — 5 
December 31, 20255,721 25 6,911 (9)12,648 79 12,727 


Year ended December 31, 2024
(millions of Canadian dollars)
Common
Shares		Additional Paid-in
Capital		Retained EarningsAccumulated
Other
Comprehensive
Loss		Hydro One Shareholders’ Equity
Non-controlling Interest
(Note 26)
Total
Equity
January 1, 20245,706 30 5,947 (3)11,680 65 11,745 
Net income— — 1,156 — 1,156 7 1,163 
Other comprehensive loss— — — (9)(9)— (9)
Distributions to noncontrolling interest (Note 26)
— — — — — (7)(7)
Dividends on common shares (Note 23)
— — (743)— (743)— (743)
Common shares issued7 (7)— — — — — 
Stock-based compensation— 5 — — 5 — 5 
December 31, 20245,713 28 6,360 (12)12,089 65 12,154 
See accompanying notes to Consolidated Financial Statements.




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HYDRO ONE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2025 and 2024


Year ended December 31 (millions of Canadian dollars)
20252024
Operating activities
Net income 1,349 1,165 
Environmental expenditures (Note 4)
(3)(11)
Adjustments for non-cash items:
Depreciation and amortization (Note 4)
966 920 
Regulatory assets and liabilities240 81 
Deferred income tax expense76 140 
Other14 (10)
Changes in non-cash balances related to operations (Note 28)
53 249 
Net cash from operating activities2,695 2,534 
Financing activities
Long-term debt issued2,698 2,781 
Long-term debt repaid (Note 15)
(1,150)(700)
Short-term notes issued6,070 2,810 
Short-term notes repaid(6,170)(2,890)
Dividends paid on common shares (Note 23)
(788)(743)
Distributions paid to noncontrolling interest(12)(10)
Contributions received from sale of noncontrolling interest16 — 
Costs to obtain financing(12)(15)
Net cash from financing activities652 1,233 
Investing activities
Capital expenditures (Note 28)
Property, plant and equipment(2,970)(2,720)
Intangible assets(80)(88)
Additions to future use assets(213)(323)
Investment in equity investees (Note 12)
(261)— 
Capital contributions received (Note 28)
3 2 
Other7 (1)
Net cash used in investing activities(3,514)(3,130)
Net change in cash and cash equivalents(167)637 
Cash and cash equivalents, beginning of year716 79 
Cash and cash equivalents, end of year549 716 

See accompanying notes to Consolidated Financial Statements.



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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2025 and 2024

1.    DESCRIPTION OF THE BUSINESS
Hydro One Limited (Hydro One or the Company) was incorporated on August 31, 2015, under the Business Corporations Act (Ontario). On October 31, 2015, the Company acquired Hydro One Inc., a company previously wholly-owned by the Province of Ontario (Province). As at December 31, 2025, the Province held approximately 47.1% (2024 - 47.1%) of the common shares of Hydro One. The businesses of Hydro One are comprised of the following three segments:
•The Transmission segment consists of owning and operating Hydro One’s transmission system which transmits high voltage electricity across the province, interconnecting local distribution companies and certain large directly connected industrial customers throughout the Ontario electricity grid. The transmission business consists of the transmission system operated by Hydro One Inc.’s rate-regulated subsidiaries, Hydro One Networks Inc. (Hydro One Networks), Hydro One Sault Ste. Marie LP (HOSSM), an approximate 80% (2024 - 100%) interest in Chatham x Lakeshore Limited Partnership (CLLP), an approximate 66% interest in B2M Limited Partnership (B2M LP) and an approximate 55% interest in Niagara Reinforcement Limited Partnership (NRLP). The Transmission segment also includes Hydro One Network’s approximate 48% minority interest in the East-West Tie Limited Partnership (EWT LP), which was acquired on March 4, 2025.
•The Distribution segment owns and operates Hydro One’s distribution system which delivers electricity to end customers and certain other municipal electricity distributors within Ontario. The distribution business consists of the distribution systems operated by Hydro One Inc.'s rate-regulated subsidiaries, Hydro One Networks and Hydro One Remote Communities Inc. (Hydro One Remotes).
•The Other segment consists principally of Hydro One’s telecommunications business, which provides telecommunications support for the Company’s transmission and distribution businesses, as well as certain corporate activities, and is not rate-regulated. The telecommunications business is carried out by Hydro One's wholly-owned subsidiary, Acronym Solutions Inc. (Acronym). In addition to supporting Hydro One's regulated business segments, Acronym offers a comprehensive suite of Information Communications Technology solutions. Hydro One's other segment also includes the deferred tax asset (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 the Company’s initial public offering in 2015. As this DTA is not required to be shared with ratepayers, the Company considers it to not be part of the regulated transmission and distribution segment assets and is included in the other segment. Furthermore, Hydro One's other segment also includes Aux Energy Inc., a wholly-owned subsidiary that provides energy solutions to commercial and industrial clients, and Ontario Charging Network LP (OCN LP), a wholly-owned subsidiary (2024 - a joint venture) that owns and operates electric vehicle fast charging stations across Ontario under the Ivy Charging Network brand.
Rate Setting
Transmission
On August 5, 2021 Hydro One Networks filed a custom Joint Rate Application (JRAP) for distribution and transmission revenue requirements for the 2023 to 2027 period. On November 29, 2022 the Ontario Energy Board (OEB) issued a Decision and Order (JRAP Decision) approving Hydro One Networks' transmission 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. Revenue requirements presented for 2024 to 2027 do not reflect the actual or expected updates resulting from the annual application process with the regulator to reflect OEB inflation factors.
On May 23, 2024, Hydro One Networks, on behalf of B2M LP, submitted B2M LP’s five-year transmission revenue requirement application for the 2025 to 2029 period. On November 21, 2024, the OEB issued a Decision and Order approving B2M LP’s five-year revenue requirement application, which includes a 2025 base revenue requirement of $38 million. Under the agreed-upon revenue requirement framework, there is no longer a requirement for B2M LP to file annual update applications with the OEB throughout the rate term, except for a one-time update in 2025, which the OEB approved in October 2025, setting the revenue requirements for 2026-2029.
On October 13, 2016, the OEB issued a Decision and Order for Hydro One Inc.’s Mergers, Amalgamations, Acquisitions and Divestitures of HOSSM, including the approval of a 10-year deferred rebasing period for the 2017 to 2026 period.
On July 12, 2024, Hydro One Networks, on behalf of CLLP, submitted CLLP’s five-year transmission revenue requirement application for the 2025 to 2029 period. On December 17, 2024, the OEB issued a Decision and Order approving CLLP’s revenue requirement application, which includes a 2025 base revenue requirement of $17 million, effective January 1, 2025. Under the agreed-upon revenue requirement framework, there is no longer a requirement for CLLP to file annual update applications with the OEB throughout the rate term, except for a one-time update in 2025, which the OEB approved in December 2025, setting the revenue requirements for 2026-2029.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 2025 and 2024

On May 23, 2024, Hydro One Networks, on behalf of NRLP, submitted NRLP’s five-year transmission revenue requirement application for the 2025 to 2029 period. On November 21, 2024, the OEB issued a Decision and Order approving NRLP’s revenue requirement application, which includes a 2025 base revenue requirement of $9 million. Under the agreed-upon revenue requirement framework, there is no longer a requirement for NRLP to file annual update applications with the OEB throughout the rate term, except for a one-time update in 2025, which the OEB approved in October 2025, setting the revenue requirements for 2026-2029.
Distribution
On November 29, 2022 the OEB issued its JRAP Decision, approving Hydro One Networks' distribution 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. Revenue requirements presented for 2024 to 2027 do not reflect the actual or expected updates resulting from the annual application process with the regulator to reflect OEB inflation factors.
On August 31, 2022, Hydro One Remotes filed its distribution rate application for the 2023 to 2027 period. On March 2, 2023, the OEB approved Hydro One Remote’s 2023 revenue requirement of $128 million with a price cap escalator index for 2024 to 2027, and a 3.72% rate increase effective May 1, 2023. Revenue requirements for 2024 to 2027 will be updated per the annual application process with the regulator to reflect OEB inflation factors.

2.    SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation and Presentation
These 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 (U.S.) generally accepted accounting principles (GAAP) and in Canadian dollars.
Use of Management Estimates
The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, gains and losses during the reporting periods. Management evaluates these estimates on an ongoing basis based upon historical experience, current conditions, and assumptions believed to be reasonable at the time the assumptions are made, with any adjustments being recognized in results of operations in the period they arise. Significant estimates relate to unbilled revenues, regulatory assets and regulatory liabilities, pension benefits, and post-retirement and post-employment benefits. Actual results may differ significantly from these estimates.
Regulatory Accounting
The OEB has the general power to include or exclude revenues, costs, gains or losses in the rates of a specific period, resulting in a change in the timing of accounting recognition from that which would have been applied in an unregulated company. Such change in timing involves the application of rate-regulated accounting in accordance with Financial Accounting Standards Board (FASB) Accounting Standard Codification (Codification) Topic 980, Regulated Operations, within the Company's regulated business, giving rise to the recognition of regulatory assets and liabilities. The Company’s regulatory assets represent certain amounts receivable from electricity customers in a future period and costs that have been deferred for accounting purposes because it is probable that they will be recovered in future rates. In addition, the Company has recorded regulatory liabilities that generally represent amounts that are refundable to electricity customers in future rates. The Company continually assesses the likelihood of recovery of each of its regulatory assets and continues to believe that it is probable that the OEB will include its regulatory assets and regulatory liabilities in setting future rates. If, at some future date, the Company judges that it is no longer probable that the OEB will include a regulatory asset or regulatory liability in setting future rates, the respective carrying amount would be reflected in results of operations, prospectively from the date the Company’s assessment is made.
Cash and Cash Equivalents
Cash and cash equivalents include cash and short-term investments with an original maturity of three months or less.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Revenue Recognition
Transmission revenues predominantly consist of transmission tariffs, which are collected through OEB-approved uniform transmission rates (UTRs) which are applied against the monthly peak demand for electricity across Hydro One's high-voltage network. OEB-approved UTRs are based on an approved revenue requirement that includes a rate of return. The transmission tariffs are designed to recover revenues necessary to support the Company's transmission system with sufficient capacity to accommodate the maximum expected demand which is influenced by weather and economic conditions. Transmission revenues are recognized as electricity is transmitted and delivered to customers.
Distribution revenues attributable to the delivery of electricity are based on OEB-approved distribution rates and are recognized on an accrual basis and include billed and unbilled revenues. Billed revenues are based on the amount of electricity delivered as measured from customer meters. At the end of each month, the amount of electricity delivered to customers since the date of the last billed meter reading is estimated, and the corresponding unbilled revenue is recorded. The unbilled revenue estimate is affected by energy consumption and changes in the composition of customer classes.
Revenues also include amounts related to sales of other services and equipment. Such revenue is recognized as services are rendered or as equipment is delivered. Revenues are recorded net of indirect taxes.
Accounts Receivable and Allowance for Doubtful Accounts
Billed accounts receivable are recorded at the invoiced amount, net of allowance for doubtful accounts. Unbilled accounts receivable are recorded at their estimated value, net of allowance for doubtful accounts. Overdue amounts related to regulated billings bear interest at OEB-approved rates. The allowance for doubtful accounts reflects the Company’s current lifetime expected credit losses (CECL) for all accounts receivable balances. The Company estimates the CECL by applying internally developed loss rates to all outstanding receivable balances by aging category on an undiscounted basis. Loss rates applied to the accounts receivable balances are based on historical overdue balances, customer payments and write-offs, which may be further supplemented from time to time to reflect management's best estimate of the loss. Accounts receivable are written-off against the allowance when they are deemed uncollectible. The allowance for doubtful accounts is affected by changes in volume, prices and economic conditions.
Noncontrolling interest
Noncontrolling interest represents the portion of equity ownership in subsidiaries that is not attributable to shareholders of Hydro One. Noncontrolling interest is initially recorded at fair value and subsequently the amount is adjusted for the proportionate share of net income or net loss and other comprehensive income (OCI) or other comprehensive loss (OCL) attributable to the noncontrolling interest and any dividends or distributions paid to the noncontrolling interest.
If a transaction results in the acquisition of all, or part, of a noncontrolling interest in a subsidiary, the acquisition of the noncontrolling interest is accounted for as an equity transaction. No gain or loss is recognized in consolidated net income or net loss or OCI or OCL as a result of changes in the noncontrolling interest, unless a change results in the loss of control by the Company.
Income Taxes
Income taxes are accounted for using the asset and liability method. Current income tax assets and current income tax liabilities are recognized based on the taxes refundable or payable on the current year’s taxable income. Current and deferred income taxes are computed based on the tax rates and tax laws enacted as at the balance sheet date. Tax benefits associated with income tax positions are recorded only when the more-likely-than-not recognition threshold is satisfied and are measured at the largest amount of benefit that has a greater than 50% likelihood of being realized upon settlement. Management evaluates each position based solely on the technical merits and facts and circumstances of the position, assuming the position will be examined by a taxing authority having full knowledge of all relevant information. Management judgment is required to determine recognition thresholds and the related amount of tax benefits to be recognized in the Consolidated Financial Statements. Management re-evaluates tax positions each period using new information about recognition or measurement as it becomes available.
Deferred Income Taxes
Deferred income tax assets and deferred income tax liabilities are recognized on all temporary differences between the tax bases and carrying amounts of assets and liabilities, including the carryforward of unused tax credits and tax losses to the extent that it is more-likely-than-not that these deductions, credits, and losses can be utilized. Deferred income tax assets and deferred income tax liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on the tax rates and tax laws that have been enacted as at the balance sheet date.
Deferred income taxes associated with the Company’s regulated operations which are considered to be more-likely-than-not to be recovered or refunded in future regulated rates charged to customers are recognized as deferred income tax regulatory assets and deferred income tax regulatory liabilities with an offset to deferred income tax expense.
Investment tax credits are recorded as a reduction of the related expenses or income tax expense in the current or future period to the extent it is more likely than not that the credits can be utilized.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Management reassesses the deferred income tax assets at each balance sheet date and reduces the amount to the extent that it is more likely than not that the deferred income tax asset will not be realized. Previously unrecognized deferred income tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become more likely than not that the tax benefit will be realized.
Property, Plant and Equipment
Property, plant and equipment is recorded at original cost, net of customer contributions, and any accumulated impairment losses. The cost of additions, including betterments and replacement asset components, is included on the consolidated balance sheets as property, plant and equipment.
The original cost of property, plant and equipment includes direct materials, direct labour (including employee benefits), contracted services, attributable capitalized financing costs, asset retirement costs, and direct and indirect overheads that are related to the capital project or program. Indirect overheads include a portion of corporate costs such as finance, treasury, human resources, and information technology. Overhead costs, including corporate functions and field services costs, are capitalized on a fully allocated basis.
Property, plant and equipment in service consists of transmission, distribution, communication, and administration and service assets, as well as land easements. Property, plant and equipment also includes future use assets, such as land, major components and spare parts, as well as capitalized project development costs associated with deferred capital projects.
Transmission
Transmission assets include assets used for the transmission of high-voltage electricity, such as transmission lines, support structures, foundations, insulators, connecting hardware and grounding systems, as well as assets used to step up the voltage of electricity from generating stations for transmission and to step down voltages for distribution, including transformers, circuit breakers and switches.
Distribution
Distribution assets include assets related to the distribution of low-voltage electricity, including lines, poles, switches, transformers, protective devices and metering systems.
Communication
Communication assets include fibre optic and microwave radio systems, optical ground wire, towers, telephone equipment and associated buildings.
Administration and Service
Administration and service assets include administrative buildings, personal computers, transport and work equipment, tools and other minor assets.
Easements
Easements include a statutory easement for the use of transmission corridor and related abutting lands pursuant to Part IX.1 of the Electricity Act, 1998 (Ontario) (Electricity Act), as well as other land rights for occupation.
Intangible Assets
Intangible assets separately acquired or internally developed are measured on initial recognition at cost, which comprises purchased software, direct labour (including employee benefits), consulting, engineering, overheads and attributable capitalized financing charges. Following initial recognition, intangible assets are carried at cost, net of any accumulated amortization and accumulated impairment losses. The Company’s intangible assets primarily represent major computer applications.
Capitalized Financing Costs
Capitalized financing costs represent interest costs attributable to the construction of property, plant and equipment or development of intangible assets. The financing cost of attributable borrowed funds is capitalized as part of the acquisition cost of such assets. The capitalized financing costs are a reduction of financing charges recognized in the consolidated statements of operations and comprehensive income. Capitalized financing costs are calculated using the Company’s weighted average effective cost of debt.
Construction and Development in Progress
Construction and development in progress consists of the capitalized cost of constructed assets that are not yet complete and which have not yet been placed in service.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Depreciation and Amortization
The cost of property, plant and equipment and intangible assets is depreciated or amortized on a straight-line basis based on the estimated remaining service life of each asset category, except for transport and work equipment, which is depreciated on a declining balance basis.
The Company periodically initiates an external independent review of its property, plant and equipment and intangible asset depreciation and amortization rates, as required by the OEB. Any changes arising from such a review are implemented on a remaining service life basis, consistent with their inclusion in electricity rates. The most recent reviews resulted in changes to rates effective January 1, 2023 for Hydro One Networks’ distribution and transmission businesses. A summary of average service lives and depreciation and amortization rates as at December 31, 2025 for the various classes of assets is included below:
Average
                             Rate
Service Life
Range
Average
Property, plant and equipment:
    Transmission
57 years
1% - 3%
2 %
    Distribution
48 years
1% - 8%
2 %
    Communication
17 years
1% - 11%
6 %
    Administration and service
28 years
1% - 20%
5 %
Intangible assets
11 years
8% - 10%
6 %
In accordance with group depreciation practices, the original cost of property, plant and equipment, or major components thereof, and intangible assets that are normally retired, is charged to accumulated depreciation, with no gain or loss being reflected in results of operations. Where a disposition of property, plant and equipment occurs through sale, a gain or loss is calculated based on proceeds and such gain or loss is included in depreciation expense.
Acquisitions and Goodwill
The Company accounts for business acquisitions using the acquisition method of accounting and, accordingly, the assets and liabilities of the acquired entities are primarily measured at their estimated fair value at the date of acquisition. Costs associated with pending acquisitions are expensed as incurred. Goodwill represents the cost of acquired companies that is in excess of the fair value of the net identifiable assets acquired at the acquisition date. Goodwill is not included in rate base.
Goodwill is evaluated for impairment on an annual basis, or more frequently if circumstances require. The Company performs a qualitative assessment to determine whether it is more likely than not that the fair value of the applicable reporting unit is greater than its carrying amount, no further testing is required. If the Company determines, as a result of its qualitative assessment, that it is more likely than not that the fair value of the applicable reporting unit is less than its carrying amount, a quantitative goodwill impairment assessment is performed. The quantitative assessment compares the fair value of the applicable reporting unit to its carrying amount, including goodwill. If the fair value of goodwill is less than the carrying amount, an impairment loss is recorded as a reduction to goodwill and as a charge to results of operations.
Based on the assessment performed as at September 30, 2025 and with no significant events since, the Company has concluded that goodwill was not impaired as at December 31, 2025.
Long-Lived Asset Impairment
When circumstances indicate the carrying value of long-lived assets may not be recoverable, the Company evaluates whether the carrying value of such assets, excluding goodwill, has been impaired. For such long-lived assets, the Company evaluates whether impairment may exist by estimating future undiscounted cash flows expected to result from the use and eventual disposition of the asset. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, a probability-weighted approach is used to develop estimates of future undiscounted cash flows. If the carrying value of the long-lived asset is not recoverable based on the estimated future undiscounted cash flows, an impairment loss is recorded, measured as the excess of the carrying value of the asset over its fair value. As a result, the asset’s carrying value is adjusted to its estimated fair value.
Within its regulated business, the carrying costs of most of Hydro One’s long-lived assets are included in rate base where they earn an OEB-approved rate of return. Asset carrying values and the related return are recovered through approved rates. As a result, such assets are only tested for impairment in the event that the OEB disallows recovery, in whole or in part, or if such a disallowance is judged to be probable. Hydro One regularly monitors the assets of its unregulated subsidiary Acronym for indications of impairment.
Management assesses the fair value of such long-lived assets using commonly accepted techniques. Techniques used to determine fair value include, but are not limited to, the use of recent third-party comparable sales for reference and internally developed discounted cash flow analysis. Significant changes in market conditions, changes to the condition of an asset, or a change in management’s intent to utilize the asset are generally viewed by management as triggering events to reassess the cash flows related to these long-lived assets. As at December 31, 2025 and 2024, no asset impairment had been recorded for assets within either the Company’s regulated or unregulated businesses.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Costs of Arranging Debt Financing
For financial liabilities classified as other than held-for-trading, the Company defers the external transaction costs related to obtaining financing and presents such amounts net of related debt on the consolidated balance sheets. Deferred issuance costs are amortized over the contractual life of the related debt on an effective-interest basis and the amortization is included within financing charges in the consolidated statements of operations and comprehensive income. Transaction costs for items classified as held-for-trading are expensed immediately.
Financial Assets and Liabilities
All financial assets and liabilities are classified into one of the following five categories: held-to-maturity; loans and receivables; held-for-trading; other liabilities; or available-for-sale. Financial assets and liabilities classified as held-for-trading are measured at fair value. All other financial assets and liabilities are measured at amortized cost. Accounts receivable and amounts due from related parties are classified as loans and receivables. The Company considers the carrying amounts of accounts receivable and amounts due from related parties to be reasonable estimates of fair value because of the short time to maturity of these instruments. The Company estimates the CECL for all accounts receivable balances, which are recognized as adjustments to the allowance for doubtful accounts. Accounts receivable are written-off against the allowance when they are deemed uncollectible. All financial instrument transactions are recorded at trade date.
The Company determines the classification of its financial assets and liabilities at the date of initial recognition. The Company designates certain of its financial assets and liabilities to be held at fair value, when it is consistent with the Company’s risk management policy disclosed in Note 16 - Fair Value of Financial Instruments and Risk Management.
Derivative Instruments and Hedge Accounting
The Company closely monitors the risks associated with changes in interest rates on its operations and, where appropriate, uses various instruments to hedge these risks. Certain of these derivative instruments qualify for hedge accounting and are designated as accounting hedges, while others either do not qualify as hedges or have not been designated as hedges (hereinafter referred to as undesignated contracts) as they are part of economic hedging relationships.
The accounting guidance for derivative instruments requires the recognition of all derivative instruments not identified as meeting the normal purchase and sale exemption as either assets or liabilities recorded at fair value on the consolidated balance sheets. For derivative instruments that qualify for hedge accounting, the Company may elect to designate such derivative instruments as either cash flow hedges or fair value hedges. The Company offsets fair value amounts recognized on its consolidated balance sheets related to derivative instruments executed with the same counterparty under the same master netting agreement.
For derivative instruments that qualify for hedge accounting, and which are designated as cash flow hedges, any unrealized gain or loss, net of tax, is recorded as a component of accumulated OCI (AOCI) or accumulated OCL (AOCL). Amounts in AOCI or AOCL are reclassified to results of operations in the same period or periods during which the hedged transaction affects results of operations and presented in the same line item as the earnings effect of the hedged item. Any gains or losses on the derivative instrument that represent hedge components excluded from the assessment of effectiveness are recognized in the same line item of the consolidated statements of operations as the hedged item. For fair value hedges, changes in fair value of both the derivative instrument and the underlying hedged exposure are recognized in the consolidated statements of operations and comprehensive income (loss) in the current period. The gain or loss on the derivative instrument is included in the same line item as the offsetting gain or loss on the hedged item in the consolidated statements of operations and comprehensive income (loss). The changes in fair value of the undesignated derivative instruments are reflected in results of operations.
Embedded derivative instruments are separated from their host contracts and are carried at fair value on the consolidated balance sheets when: (a) the economic characteristics and risks of the embedded derivative are not clearly and closely related to the economic characteristics and risks of the host contract; (b) the hybrid instrument is not measured at fair value, with changes in fair value recognized in results of operations each period; and (c) the embedded derivative itself meets the definition of a derivative. The Company does not engage in derivative trading or speculative activities and had no embedded derivatives that required bifurcation as at December 31, 2025 or 2024.
Hydro One periodically develops hedging strategies taking into account risk management objectives. At the inception of a hedging relationship where the Company has elected to apply hedge accounting, Hydro One formally documents the relationship between the hedged item and the hedging instrument, the related risk management objective, the nature of the specific risk exposure being hedged, and the method for assessing the effectiveness of the hedging relationship. The Company also assesses, both at the inception of the hedge and on a quarterly basis, whether the hedging instruments are effective in offsetting changes in fair values or cash flows of the hedged items.


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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Employee Future Benefits
Employee future benefits provided by Hydro One include pension, post-retirement and post-employment benefits. The costs of the Company’s pension, post-retirement and post-employment benefit plans are recorded over the periods during which employees render service.
The Company recognizes the funded status of its defined benefit pension plan (Pension Plan) and its post-retirement and post-employment plans on its consolidated balance sheets and subsequently recognizes the changes in funded status at the end of each reporting year. Defined benefit pension, post-retirement and post-employment plans are considered to be underfunded when the projected benefit obligation (PBO) exceeds the fair value of the plan assets. Liabilities are recognized on the consolidated balance sheets for any net underfunded PBO. The net underfunded PBO may be disclosed as a current liability, long-term liability, or both. The current portion is the amount by which the actuarial present value of benefits included in the benefit obligation payable in the next 12 months exceeds the fair value of plan assets. If the fair value of plan assets exceeds the PBO of the plan, an asset is recognized equal to the net overfunded PBO. The post-retirement and post-employment benefit plans are unfunded because there are no related plan assets.
Hydro One recognizes its contributions to the defined contribution pension plan (DC Plan) as pension expense, with a portion being capitalized as part of labour costs included in capital expenditures. The expensed amount is included in operation, maintenance and administration (OM&A) costs in the consolidated statements of operations and comprehensive income.
Defined Benefit Pension
Defined benefit pension costs are recorded on an accrual basis for financial reporting purposes. Pension costs are actuarially determined using the projected benefit method prorated on service and are based on assumptions that reflect management’s best estimate of the effect of future events, including future compensation increases. Past service costs from plan amendments and all actuarial gains and losses are amortized on a straight-line basis over the expected average remaining service period of active employees in the plan, or over the estimated remaining life expectancy of inactive employees in the plan. Pension plan assets, consisting primarily of listed and unlisted equity securities, marketable and private debt, corporate and government debt securities as well as unlisted real estate and unlisted infrastructure investments, are recorded at fair value at the end of each year. Hydro One records a regulatory asset or regulatory liability equal to the net underfunded or overfunded PBO for its pension plan. Defined benefit pension costs are attributed to labour costs on a cash basis and a portion directly related to acquisition and development of capital assets is capitalized as part of the cost of property, plant and equipment and intangible assets. The remaining defined benefit pension costs are charged to results of operations (OM&A costs).
Post-retirement and Post-employment Benefits
Post-retirement and post-employment benefits are recorded and included in rates on an accrual basis. Costs are determined by independent actuaries using the projected benefit method prorated on service and based on assumptions that reflect management’s best estimates. For post-retirement benefits, past service costs from plan amendments are amortized to results of operations based on the expected average remaining service period.
For post-retirement benefits, all actuarial gains or actuarial losses are deferred using the “corridor” approach. The amount calculated above the “corridor” is amortized to results of operations on a straight-line basis over the expected average remaining service life of active employees in the plan or over the remaining life expectancy of inactive employees in the plan. The post-retirement benefit obligation is remeasured to its fair value at each year end, based on an annual actuarial report, with an offset to the associated regulatory account, to the extent of the remeasurement adjustment.
The actuarial gains and actuarial losses on post-employment obligations that are incurred during the year are recognized immediately to results of operations. The post-employment benefit obligation is remeasured to its fair value at each year end based on an annual actuarial report, with an offset to the associated regulatory account, to the extent of the remeasurement adjustment.
All post-retirement and post-employment benefit costs are attributed to labour costs and are either charged to results of operations (OM&A costs) or capitalized as part of the cost of property, plant and equipment and intangible assets (applies to the service cost component of benefit cost) and to regulatory assets for all other components of the benefit cost, consistent with their inclusion in OEB-approved rates.
Stock-Based Compensation
Share Grant Plans
Hydro One measures share grant plans based on fair value of share grants as estimated based on the grant date common share price. The costs are recognized in the financial statements using the graded-vesting attribution method for share grant plans that have both a performance condition and a service condition. The Company records a regulatory asset equal to the accrued costs of share grant plans recognized in each period. Costs are transferred from the regulatory asset to labour costs at the time the share grants vest and are recovered in rates. Forfeitures are recognized as they occur.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Deferred Share Unit (DSU) Plans
The Company records the liabilities associated with its Directors’ and Management DSU Plans at fair value at each reporting date until settlement, recognizing compensation expense over the vesting period on a straight-line basis. The fair value of the DSU liability is based on the Company’s common share closing price at the end of each reporting period.
Long-term Incentive Plan (LTIP)
The Company measures the awards issued under its LTIP at fair value based on the grant date common share price. The fair value of liability-classified awards is based on the Company’s common share closing price at the end of each reporting period. The related compensation expense is recognized over the vesting period on a straight-line basis. Forfeitures are recognized as they occur.
Loss Contingencies
Hydro One is involved in certain legal and environmental matters that arise in the normal course of business. In the preparation of its Consolidated Financial Statements, management makes judgments regarding the future outcome of contingent events and records a loss for a contingency based on its best estimate when it is determined that such loss is probable and the amount of the loss can be reasonably estimated. Where the loss amount is recoverable in future rates, a regulatory asset is also recorded. When a range estimate for the probable loss exists and no amount within the range is a better estimate than any other amount, the Company records a loss at the minimum amount within the range.
Management regularly reviews current information available to determine whether recorded provisions should be adjusted and whether new provisions are required. Estimating probable losses may require analysis of multiple forecasts and scenarios that often depend on judgments about potential actions by third parties, such as federal, provincial and local courts or regulators. Contingent liabilities are often resolved over long periods of time. Amounts recorded in the Consolidated Financial Statements may differ from the actual outcome once the contingency is resolved. Such differences could have a material impact on future results of operations, financial position and cash flows of the Company.
Provisions are based upon current estimates and are subject to greater uncertainty where the projection period is lengthy. A significant upward or downward trend in the number of claims filed, the nature of the alleged injuries, and the average cost of resolving each claim could change the estimated provision, as could any substantial adverse or favourable verdict at trial. A federal or provincial legislative outcome or structured settlement could also change the estimated liability. Legal fees are expensed as incurred.
Environmental Liabilities
Environmental liabilities are recorded in respect of past contamination when it is determined that future environmental remediation expenditures are probable under existing statute or regulation and the amount of the future expenditures can be reasonably estimated. Hydro One records a liability for the estimated future expenditures associated with contaminated land assessment and remediation (LAR) and for the phase-out and destruction of polychlorinated biphenyl (PCB)-contaminated mineral oil removed from electrical equipment, based on the present value of these estimated future expenditures. To the extent that the Company anticipates that the future expenditures will continue to be recoverable in future rates, an offsetting regulatory asset has been recorded to reflect the anticipated amount of future recovery of these environmental expenditures from customers. Hydro One reviews its estimates of future environmental expenditures annually, or more frequently if there are indications that circumstances have changed. Estimate changes are accounted for prospectively.
Asset Retirement Obligations
Asset retirement obligations are recorded for legal obligations associated with the future removal and disposal of long-lived assets. Such obligations may result from the acquisition, construction, development and/or normal use of the asset. Conditional asset retirement obligations are recorded when there is a legal obligation to perform a future asset retirement activity but where the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Company. In such a case, the obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement. This uncertainty is incorporated in the fair value measurement of the obligation.
When recording an asset retirement obligation, the present value of the estimated future expenditures required to complete the asset retirement activity is recorded in the period in which the obligation is incurred, if a reasonable estimate can be made. In general, the present value of the estimated future expenditures is added to the carrying amount of the associated asset and the resulting asset retirement cost is depreciated over the estimated useful life of the asset. The present value is    determined with a discount rate that equates to the Company’s credit-adjusted risk-free rate. Where an asset is no longer in service when an asset retirement obligation is recorded, the asset retirement cost is recorded in results of operations.
Leases
At the commencement date of a lease, the minimum lease payments are discounted and recognized as a lease obligation. Discount rates used correspond to the Company's incremental borrowing rates. Renewal options are assessed for their likelihood of being exercised and are included in the measurement of the lease obligation when it is reasonably certain they will be

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




exercised. The Company does not recognize leases with a term of less than 12 months. A corresponding Right-of-Use (ROU) asset is recognized at the commencement date of a lease. The ROU asset is measured as the lease obligation adjusted for any lease payments made and/or any lease incentives and initial direct costs incurred. ROU assets are included in other long-term assets, and corresponding lease obligations are included in other current liabilities and other long-term liabilities on the consolidated balance sheets.
The Company’s lease portfolio consists primarily of operating leases; finance leases are not material and, when applicable, may be fully prepaid at commencement.
Subsequent to the commencement date, the lease expense recognized at each reporting period is the total remaining lease payments over the remaining lease term. Lease obligations are measured as the present value of the remaining unpaid lease payments using the discount rate established at commencement date. The amortization of the ROU assets is calculated as the difference between the lease expense and the accretion of interest, which is calculated using the effective interest method. Lease modifications and impairments are assessed at each reporting period to assess the need for a remeasurement of the lease obligations or ROU assets.
Equity Method Investments
The Company accounts for its investments in entities over which it has significant influence but not a controlling interest using the equity method of accounting. Significant influence is generally presumed to exist when the Company owns 20% to 50% of the voting stock of the investee, but can also exist when the Company owns less than 20% if it has the ability to exercise significant influence through other means. Under this method, the investment is initially recorded at cost and subsequently adjusted to recognize the Company’s share of the earnings or losses of the investee, as well as any distributions received from the investee.
3.    NEW ACCOUNTING PRONOUNCEMENTS
The following table presents Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) that are applicable to Hydro One:
Recently Adopted Accounting Guidance
GuidanceDate issued
Description
ASU Effective DateImpact on Hydro One
ASU 2024-02March 2024The amendments contain modifications to the codification that remove various concept statements which may be extraneous and not required to understand or apply the guidance or references used in prior statements to provide guidance in certain topical areas.Fiscal years beginning after December 15, 2024.No impact upon adoption
ASU 2023-09December 2023The amendments address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.Annual periods beginning after December 15, 2024.Adoption of the standard does not materially affect Hydro One’s income tax disclosures.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Recently Issued Accounting Guidance Not Yet Adopted
GuidanceDate issued
Description
ASU Effective DateImpact on Hydro One
ASU 2023-06October 2023The amendments represent changes to clarify or improve disclosure or presentation requirements of a variety of subtopics in the FASB Codification. Many of the amendments allow users to more easily compare entities subject to the U.S. Securities and Exchange’s (SEC) existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations.

Applicable to all entities, if by June 30, 2027 the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.		Two years subsequent to the date on which the SEC’s removal of that related disclosure becomes effective.Under assessment
ASU
2024-03		November 2024The amendments require public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods, which are not generally presented in the current financial statements.Annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Under assessment
ASU 2025-03May 2025The amendments require entities to apply the guidance for identifying the accounting acquirer in transactions where a business that qualifies as a Variable Interest Entity is acquired through the exchange of equity interests.Annual and interim periods beginning after December 15, 2026.No impact upon adoption
ASU 2025-05July 2025The amendments allow all entities to use a practical expedient when estimating expected credit losses for current accounts receivable and contract assets under Topic 606, by assuming that current conditions as of the balance sheet date remain unchanged over the asset’s life. Additionally, entities other than public business entities that elect this expedient may adopt an accounting policy to consider post–balance sheet date collection activity in their credit loss estimates.Annual and interim periods beginning after December 15, 2025.No impact upon adoption
ASU 2025-06September 2025The amendments modernize accounting for internal-use software by removing outdated development stage references and introducing a capitalization threshold based on management authorization and project completion probability. Annual periods beginning after December 15, 2027.Under assessment
ASU 2025-09November 2025The amendments expand hedge-accounting eligibility and better align the guidance with common risk‑management practices. Key updates allow grouping forecasted transactions with similar exposure, simplify hedging of choose‑your‑rate variable‑rate debt, and broaden eligibility for hedging nonfinancial components. The guidance modernizes treatment of certain option‑based derivatives and resolves mismatches in dual hedge relationships. Annual and interim periods beginning after December 15, 2026.Under assessment
ASU 2025-10December 2025The amendments establish authoritative GAAP for government grants, setting recognition, measurement, presentation, and disclosure requirements. Annual and interim periods beginning after December 15, 2028.Under assessment
ASU 2025-11December 2025The amendments clarify interim reporting by establishing a complete list of required GAAP interim disclosures. They introduce a disclosure principle requiring entities to report material events occurring after the annual reporting period. The Update also clarifies types of interim reports and the form and content of interim financial statements. Overall, the changes enhance clarity and consistency without altering existing disclosure requirements.Interim reporting periods within annual reporting periods beginning after December 15, 2027.Under assessment
ASU 2025-12December 2025The amendments clarify existing guidance, correct errors, and introduce minor improvements to numerous Codification Topics, thereby making the requirements easier for entities to understand and apply.Annual and interim periods beginning after December 15, 2026.Under assessment

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




4.    DEPRECIATION, AMORTIZATION AND ASSET REMOVAL COSTS
Year ended December 31 (millions of dollars)
20252024
Depreciation of property, plant and equipment874 828 
Amortization of intangible assets89 81 
Amortization of regulatory assets3 11 
Depreciation and amortization966 920 
Asset removal costs145 146 
1,111 1,066 
5. FINANCING CHARGES
Year ended December 31 (millions of dollars)
20252024
Interest on long-term debt736 674 
Interest on regulatory accounts24 25 
Interest on short-term notes23 21 
Realized loss (gain) on cash flow hedges (interest-rate swap agreements) (Note 16)
4 (4)
Other19 18 
Less: Interest capitalized on construction and development in progress(110)(89)
           Interest earned on cash and cash equivalents(17)(24)
679 621 
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 deferred income tax regulatory liabilities, with an offset to deferred income tax recovery or deferred income tax expense, respectively. The Company’s consolidated income tax expense or income tax 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 income tax recovery differs from the amount that would have been recorded using the statutory income tax rate. As the Company operates in Ontario, it is subject to the combined Canadian federal and Ontario statutory rates of 26.5%.
The reconciliation between the statutory and the effective tax rates is provided as follows:
20252024
Year ended December 31
(millions of dollars)(percentage)(millions of dollars)(percentage)
Income before income tax expense1,568 1,346 
Income tax expense at statutory rate of 26.5% (2024 - 26.5%)
416 26.5 %357 26.5 %
Increase (decrease) resulting from:
Net temporary differences recoverable in future rates charged to customers:
Capital cost allowance in excess of depreciation and amortization(106)(6.8)%(83)(6.2)%
Overheads capitalized for accounting but deducted for tax purposes(54)(3.4)%(51)(3.8)%
Interest capitalized for accounting but deducted for tax purposes(29)(1.8)%(23)(1.7)%
Pension and post-retirement benefit contributions in excess of pension expense(5)(0.3)%(10)(0.7)%
Non-refundable tax credit(5)(0.3)%(3)(0.2)%
Environmental expenditures(1)(0.1)%(3)(0.2)%
Other1 0.1 %(1)(0.1)%
Net temporary differences attributable to regulated business(199)(12.7)%(174)(12.9)%
Net permanent differences2 0.1 %(2)(0.1)%
Total income tax expense219 14.0 %181 13.4 %
The major components of income tax expense are as follows:
Year ended December 31 (millions of dollars)
20252024
Current income tax expense144 38 
Deferred income tax expense75 143 
Total income tax expense219 181 

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Deferred Income Tax Assets and Liabilities
Deferred income tax assets and deferred income tax liabilities reflect the future income tax consequences attributable to temporary differences between the tax bases and the financial statement carrying amounts of the assets and liabilities including the carry forward amounts of tax losses and tax credits. Deferred income tax assets and deferred income tax liabilities attributable to the Company’s regulated business are recognized with a corresponding offset in deferred income tax regulatory assets and deferred income tax liabilities to reflect the anticipated recovery or repayment of these balances in the future electricity rates. As at December 31, 2025 and 2024, deferred income tax assets and deferred income tax liabilities consisted of the following:
As at December 31 (millions of dollars)
20252024
Deferred income tax assets
    Post-retirement and post-employment benefits expense in excess of cash payments616 585 
    Regulatory assets and liabilities491 449 
    Non-capital losses91 105 
    Non-depreciable capital property255 255 
    Tax credit carryforwards211 245 
    Investment in subsidiaries114 113 
    Capital losses27 19 
    Environmental expenditures15 16 
    Other3 11 
1,823 1,798 
Less: valuation allowance(399)(394)
Total deferred income tax assets1,424 1,404 
Deferred income tax liabilities
    Capital cost allowance in excess of depreciation and amortization2,874 2,494 
    Pension assets214 235 
Total deferred income tax liabilities3,088 2,729 
Net deferred income tax liabilities(1,664)(1,325)
The net deferred income tax liabilities are presented on the consolidated balance sheets as follows:
As at December 31 (millions of dollars)
20252024
Long-term:
    Deferred income tax assets135 127 
    Deferred income tax liabilities(1,799)(1,452)
Net deferred income tax liabilities(1,664)(1,325)
The valuation allowance for deferred income tax assets as at December 31, 2025 was $399 million (2024 - $394 million). The valuation allowance primarily relates to temporary differences for non-depreciable assets, investments in subsidiaries and capital losses carried forward.
As at December 31, 2025 and 2024, the Company had non-capital losses carried forward available to reduce future years’ taxable income, which expire as follows:
Year of expiry (millions of dollars)
20252024
20361 1 
20374 41 
203890 92 
203915 77 
20409 14 
204120 22 
204229 38 
204332 38 
204459 51 
204568 — 
Total losses327 374 

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




7.    ACCOUNTS RECEIVABLE
As at December 31 (millions of dollars)
20252024
Accounts receivable - billed467 433 
Accounts receivable - unbilled673 539 
Accounts receivable, gross1,140 972 
Allowance for doubtful accounts(57)(61)
Accounts receivable, net1,083 911 
The following table shows the movements in the allowance for doubtful accounts for the years ended December 31, 2025 and 2024:
As at December 31 (millions of dollars)
20252024
Allowance for doubtful accounts – beginning(61)(57)
Write-offs23 18 
Additions to allowance for doubtful accounts(19)(22)
Allowance for doubtful accounts – ending(57)(61)
8.    OTHER CURRENT ASSETS
As at December 31 (millions of dollars)
20252024
Prepaid expenses and other assets92 94 
Materials and supplies31 29 
Regulatory assets (Note 11)
10 42 
133 165 
9.    PROPERTY, PLANT AND EQUIPMENT

As at December 31, 2025 (millions of dollars)
Property, Plant 
and Equipment		Accumulated
Depreciation		Construction
in Progress
Total
Transmission23,618 7,437 2,191 18,372 
Distribution15,338 5,053 304 10,589 
Communication1,539 1,327 57 269 
Administration and service2,578 1,101 46 1,523 
Easements821 124 — 697 
43,894 15,042 2,598 31,450 

As at December 31, 2024 (millions of dollars)
Property, Plant 
and Equipment		Accumulated
Depreciation		Construction
in Progress
Total
Transmission22,359 7,100 1,616 16,875 
Distribution14,335 4,813 318 9,840 
Communication1,511 1,242 45 314 
Administration and service2,382 1,063 134 1,453 
Easements733 122 — 611 
41,320 14,340 2,113 29,093 
Financing charges capitalized on property, plant and equipment under construction were $107 million in 2025 (2024 - $85 million).

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




10.    INTANGIBLE ASSETS

As at December 31, 2025 (millions of dollars)
Intangible
Assets		Accumulated
Amortization		Development
in Progress
Total
Computer applications software1,585 960 29 654 
Other5 5 — — 
1,590 965 29 654 

As at December 31, 2024 (millions of dollars)
Intangible
Assets		Accumulated
Amortization		Development
in Progress
Total
Computer applications software1,481 872 51 660 
Other6 5 — 1 
1,487 877 51 661 
Financing charges capitalized on intangible assets under development were $3 million in 2025 (2024 - $4 million). The estimated annual amortization expense for intangible assets is as follows: 2026 - $91 million; 2027 - $88 million; 2028 - $83 million; 2029 - $74 million; and 2030 - $66 million.
11.    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 December 31 (millions of dollars)
20252024
Regulatory assets:
    Deferred income tax regulatory asset3,549 3,263 
    Broadband deferral73 48 
    Post-retirement and post-employment benefits - non-service cost49 72 
    Environmental43 44 
    Getting Ontario Connected Act variance39 24 
    Distribution rate riders26 — 
    Incremental cloud computing implementation costs deferral20 10 
    Stock-based compensation18 24 
    Rural and remote rate protection (RRRP) variance— 18 
    Other50 42 
Total regulatory assets3,867 3,545 
Less: current portion(10)(42)
3,857 3,503 
Regulatory liabilities:
    Pension benefit regulatory liability610 647 
    Post-retirement and post-employment benefits336 376 
    Earnings sharing mechanism (ESM) deferral310 150 
    Retail settlement variance account (RSVA)242 157 
    External revenue variance75 31 
    Capitalized overhead tax variance50 38 
    Other post-employment benefits (OPEB) asymmetrical carrying charge variance49 33 
    Asset removal costs cumulative variance48 26 
    Tax rule changes variance36 34 
    Pension cost differential variance30 21 
    Advanced Metering Infrastructure (AMI) 2.0 variance29 7 
    Deferred income tax regulatory liability9 4 
    Distribution rate riders— 45 
    Other27 29 
Total regulatory liabilities1,851 1,598 
Less: current portion(230)(122)
1,621 1,476 

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Deferred Income Tax Regulatory Asset and Liability
Deferred income taxes are recognized on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable income. The Company has recognized regulatory assets and regulatory liabilities that correspond to deferred income taxes that flow through the rate-setting process. In the absence of rate-regulated accounting, the Company’s income tax expense would have been recognized using the liability method and there would be no regulatory accounts established for income taxes to be recovered through future rates.
Broadband Deferral
The Company recognizes the incremental costs and incremental revenues attributable to carrying out activities pertaining to designated broadband projects as defined under Building Broadband Faster Act (Ontario) in this generic deferral account.
Post-Retirement and Post-Employment Benefits - Non-Service Cost
Hydro One has recorded a regulatory asset relating to the future recovery of its post-retirement and post-employment benefits other than service costs. The regulatory asset includes the applicable tax impact to reflect taxes payable. Prior to adoption of ASU 2017-07 in 2018, these amounts were capitalized to property, plant and equipment and intangible assets. In 2018 and 2019, the OEB approved the regulatory asset for Hydro One Networks’ transmission business and distribution business, respectively. As part of Hydro One Networks' 2020 to 2022 Transmission Decision, the OEB concluded that the non-service cost component of Hydro One's OPEB costs shall be recognized as OM&A for both its transmission and distribution businesses. Furthermore, Hydro One Networks Distribution continued to record the non-service cost component of OPEBs in this account until the end of 2022. As part of the JRAP Decision received in November 2022, the OEB approved the disposition of Hydro One Networks' transmission and distribution account balances as at December 31, 2020, including accrued interest, which were recovered from ratepayers over a one-year period ending December 31, 2023, and a three-year period ended December 31, 2025, respectively.
Environmental
Hydro One records a liability for the estimated future expenditures required to remediate environmental contamination. A regulatory asset is recognized to the extent management considers it to be probable that environmental expenditures will be recovered in the future through the rate-setting process. For the year ended December 31, 2025, the Company has recorded a portion of the liability as a regulatory asset. In 2025, the revaluation adjustment increased the environmental regulatory asset by $2 million (2024 - $2 million) to reflect changes in the recoverable portion of the Company’s PCB and LAR environmental liabilities. The environmental regulatory asset is amortized to results of operations based on the pattern of actual expenditures incurred and charged to environmental liabilities. The OEB has the discretion to examine and assess the prudence and the timing of recovery of all of Hydro One’s actual environmental expenditures.
Getting Ontario Connected Act Variance
On October 31, 2023, the OEB issued its Decision and Order approving the establishment of a generic sector-wide variance account, effective April 1, 2023. The account was established to record incremental costs of locating underground infrastructure resulting from the implementation of Provincial legislation: Bill 93, Getting Ontario Connected Act, 2022.
Distribution Rate Riders
As part of the JRAP Decision, the OEB approved the disposition of certain deferral and variance account balances as at December 31, 2020, including accrued interest, which were accumulated in distribution rate riders. The amounts were disposed of over a three-year period that ended December 31, 2025. The balance in the account is mostly comprised of excess returns to be collected from ratepayers in a future rate application.
Incremental cloud computing implementation costs deferral
On November 2, 2023, the OEB issued an Accounting Order approving the establishment of a generic sector-wide deferral account, effective December 1, 2023. The account was established to record incremental cloud computing implementation costs.
Stock-based Compensation
The Company recognizes costs associated with share grant plans as a regulatory asset as management considers it probable that share grant plans' costs will be recovered in the future through the rate-setting process. Share grant costs are transferred to labour costs at the time they vest and are issued, and are recovered in rates in accordance with recovery of these labour costs.
RRRP Variance
Hydro One Remotes receives RRRP amounts from the Independent Electricity System Operator (IESO). As at December 31, 2025, the Company recognized a regulatory liability representing the amounts over-collected to achieve breakeven net income, as regulated under the cost recovery model. In both 2025 and 2024, RRRP amounts received were higher than amounts required to achieve breakeven net income, and as such, the regulatory asset decreased by $24 million and $12 million, in 2025 and 2024, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Pension Benefit Regulatory Liability
In accordance with OEB rate orders, pension costs are recovered on a cash basis as employer contributions are paid to the pension fund in accordance with the Pension Benefits Act (Ontario). The Company recognizes the net unfunded or funded status of pension obligations on the consolidated balance sheets with an offset to the associated regulatory asset or regulatory liability. The pension benefit obligation is remeasured to the present value of the actuarially determined benefit obligation at each year end based on an annual actuarial report, with an offset to the associated regulatory asset or regulatory liability, to the extent of the remeasurement adjustment.
Post-Retirement and Post-Employment Benefits
In accordance with OEB rate orders, post-retirement and post-employment benefits costs are recovered on an accrual basis. The Company recognizes the net unfunded or funded status of post-retirement and post-employment obligations on the consolidated balance sheets with an incremental offset to the associated regulatory asset or regulatory liability, as the case may be. A regulatory asset or regulatory liability is recognized because management considers it to be probable that post-retirement and post-employment benefit costs will be recovered or returned in the future through the rate-setting process. The post-retirement and post-employment benefit obligation is remeasured to the present value of the actuarially determined benefit obligation at each year end based on an annual actuarial report, with an offset to the associated regulatory asset or regulatory liability, as the case may be, to the extent of the remeasurement adjustment.
ESM Deferral
In March 2019, the OEB approved the establishment of an ESM deferral account for Hydro One Networks' distribution segment to record over-earnings including tax impacts. Under this mechanism, Hydro One shares 50% of regulated earnings that exceed the OEB-approved regulatory return-on-equity (ROE) by more than 100 basis points with distribution ratepayers. A similar account was also approved for B2M LP in January 2020, Hydro One Networks’ transmission segment and NRLP in April 2020, and CLLP in December 2024. HOSSM's account was approved as part of the acquisition decision in October 2016 and became effective in 2022, with a 300 basis points threshold applied. The balance in the account as at December 31, 2025 mostly relates to Hydro One Networks’ distribution and transmission businesses. As part of the JRAP Decision received in November 2022, the OEB approved the disposition of Hydro One Networks' distribution business' balance as at December 31, 2020, including accrued interest, over a three-year period that ended December 31, 2025. The OEB also approved the disposition of the ESM account balances as at December 31, 2024 in Hydro One Networks’ distribution and transmission businesses, B2M LP, NRLP, and HOSSM’s 2026 rates application on a final basis.
RSVA
Hydro One has deferred certain retail settlement variance amounts under the provisions of Article 490 of the OEB’s Accounting Procedures Handbook. The RSVA account tracks the difference between the cost of power purchased from the IESO and the cost of power recovered from ratepayers. As part of the JRAP Decision received in November 2022, the OEB approved the disposition of Hydro One Networks' distribution business' balance as at December 31, 2020, including accrued interest, over a three-year period that ended December 31, 2025. In December 2024, as part of the Decision and Order on 2025 distribution rates, the OEB approved, on an interim basis, the disposition of certain RSVA balances as at December 31, 2023, including accrued interest, over a one-year period that ended December 31, 2025. This disposition became final upon receipt of the Decision and Order on 2026 distribution rates issued in December 2025. The OEB also approved disposition of certain RSVA balances as at December 31, 2025, including accrued interest, over a one-year period ending December 31, 2026 on both an interim and final basis.
External Revenue Variance
The external revenue variance account balance reflects the difference between Hydro One Networks' transmission business' actual export service revenue and external revenues from secondary land use, and the OEB-approved amounts. The account also records the difference between actual net external station maintenance, engineering and construction services revenue, and other external revenue, and the OEB-approved amounts.
Capitalized Overhead Tax Variance
As part of the JRAP Decision, the OEB approved the establishment of a capitalized overhead tax variance account to capture the difference between the capitalized overheads deducted in calculating the regulatory tax expense included in rates and the actual capitalized overhead costs deducted in Hydro One's tax returns for Hydro One Networks' transmission and distribution businesses for the 2016 to 2027 period. Variance amounts are recognized at the earlier of (i) when the tax year has been audited by the Canada Revenue Agency or (ii) when the taxation year is statute barred.
OPEB Asymmetrical Carrying Charge Variance Account
On September 14, 2017, the OEB issued its Report of the Board: Regulatory Treatment of Pension and OPEB Costs that allowed rate-regulated utilities to track the difference between their pension and OPEB costs calculated under the accrual method and the cash payment method, effective January 1, 2018, and record the carrying charges associated with the balance on an asymmetrical basis. As part of the JRAP Decision received in November 2022, the OEB approved the disposition of Hydro

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




One Networks’ transmission and distribution account balances as at December 31, 2020, including accrued interest, which were returned to ratepayers over a one-year period ended December 31, 2023, and a three-year period ended December 31, 2025, respectively. As part of the same decision, the OEB approved the continuance of this account for Hydro One Networks’ transmission business and the establishment of this account for Hydro One Networks’ distribution business for 2023 to 2027.
Asset Removal Costs Cumulative Variance
In April 2020, the OEB approved the establishment of an asset removal costs cumulative variance account for Hydro One Networks' transmission business to record the difference between the revenue requirement associated with forecast asset removal costs included in depreciation expense and actual asset removal costs. This account is asymmetrical to the benefit of ratepayers on a cumulative basis. As part of the JRAP Decision received in November 2022, the OEB approved the continuance of this account for Hydro One Networks’ transmission business and the establishment of this account for Hydro One Networks’ distribution business for the 2023 to 2027 period.
Tax Rule Changes Variance
The 2019 federal and Ontario budgets (Budgets) provided certain time-limited investment incentives permitting Hydro One to deduct accelerated capital cost allowance of up to three times the first-year rate for capital investments acquired after November 20, 2018 and placed in-service before January 1, 2028 (Accelerated Depreciation). Following the enactment of the Budget measures in the second quarter of 2019, the OEB directed all Ontario regulated utilities including Hydro One to track the full revenue impact of the tax benefits related to the Accelerated Depreciation rules to ratepayers. The tax benefit to be returned to ratepayers in the future gave rise to a regulatory liability and resulted in a decrease in revenues as current rates do not include the benefit of the Accelerated Depreciation; therefore, the revenue subject to refund cannot be recognized. As part of the JRAP Decision received in November 2022, the OEB approved the disposition of Hydro One Networks' transmission and distribution account balances as at December 31, 2020, including accrued interest, which were returned to ratepayers over a one-year period ended December 31, 2023, and a three-year period ended December 31, 2025, respectively.
Pension Cost Differential
Variances between the OM&A pension cost recognized and the cost embedded in rates as part of the rate-setting process for Hydro One Networks' transmission and distribution businesses are recognized as a regulatory asset or regulatory liability, as the case may be. As part of the JRAP Decision received in November 2022, the OEB approved the disposition of Hydro One Networks' transmission and distribution account balances as at December 31, 2020, including accrued interest, which were returned to ratepayers over a one-year period ended December 31, 2023 and a three-year period ended December 31, 2025, respectively.
AMI 2.0 Variance
As part of the JRAP Decision, the OEB approved the establishment of the AMI 2.0 variance account. The account records the difference in revenue requirement impact including tax, if any, between the planned in-service additions included in the forecasted costs of the AMI 2.0 program over the 2023-2027 period and the actual in-service additions achieved as part of the AMI 2.0 program over the 2023-2027 period. The account is asymmetrical to the benefit of ratepayers.
12.    OTHER LONG-TERM ASSETS
As at December 31 (millions of dollars)
20252024
Deferred pension assets (Note 18)
610 647 
Investments in associates1
302 46 
Right-of-Use assets (Note 21)
47 55 
Other long-term assets64 60 
1,023 808 
1 On March 4, 2025, Hydro One Networks completed the acquisition of an approximate 48% interest in the EWT LP for approximately $261 million in cash, including closing adjustments.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




13.    ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
As at December 31 (millions of dollars)
20252024
Accrued liabilities944 794 
Accounts payable371 348 
Unearned revenue313 336 
Regulatory liabilities (Note 11)
230 122 
Accrued interest203 180 
Lease obligations (Note 21)
14 14 
Environmental liabilities7 11 
Derivative liabilities (Note 16)
4 4 
2,086 1,809 
14.    OTHER LONG-TERM LIABILITIES
As at December 31 (millions of dollars)
20252024
Post-retirement and post-employment benefit liability (Note 18)
1,672 1,590 
Asset retirement obligations (Note 20)
43 38 
Environmental liabilities (Note 19)
37 36 
Lease obligations (Note 21)
29 41 
Derivative liabilities (Note 16)
— 3 
Other long-term liabilities42 43 
1,823 1,751 
15.    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 Hydro One Inc.’s 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 of up to 365 days. The commercial paper program is supported by Hydro One Inc.’s revolving standby credit facilities totalling $3,050 million.
As at December 31, 2025, Hydro One’s consolidated committed, unsecured, and revolving credit facilities (Operating Credit Facilities) consisted of the following:
(millions of dollars)MaturityTotal
Amount		Amount
Drawn
Hydro One Inc.
    Revolving standby credit facilities1,2
June 20303,050 — 
Hydro One
    Five-year senior, revolving term credit facility2
June 2030250 — 
Total3,300 — 
1 On June 1, 2024, Hydro One Inc. increased the committed amount under the Operating Credit Facilities by $750 million.
2 On June 1, 2025, the maturity dates for the Operating Credit Facilities were extended from June 2029 to June 2030.
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 Operating Credit Facilities include a pricing adjustment which can increase or decrease Hydro One’s cost of funding based on its performance on certain sustainability performance measures, which are related to Hydro One's sustainability goals. The obligation of each lender to extend credit under its credit facility is subject to various conditions including that no event of default has occurred or would result from such credit extension.
Subsidiary Debt Guarantee
Hydro One Holdings Limited (HOHL) is an indirect wholly-owned subsidiary of Hydro One that may offer and sell debt securities. Any debt securities issued by HOHL are fully and unconditionally guaranteed by the Company. As at December 31, 2025 and 2024, no debt securities have been issued by HOHL.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Long-Term Debt
The following table presents long-term debt outstanding as at December 31, 2025 and 2024:
As at December 31 (millions of dollars)
20252024
1.76% Series 45 notes due 2025
— 400 
2.97% Series 40 notes due 2025
— 350 
5.54% Series 57 notes due 20251
— 400 
2.77% Series 35 notes due 2026
500 500 
Floating-rate Series 56 notes due 20262
425 425 
4.91% Series 52 notes due 2028
750 750 
3.02% Series 43 notes due 2029
550 550 
3.93% Series 53 notes due 2029
550 550 
2.16% Series 46 notes due 2030
400 400 
7.35% Debentures due 2030
400 400 
1.69% Series 49 notes due 2031
400 400 
2.23% Series 50 notes due 2031
450 450 
6.93% Series 2 notes due 2032
500 500 
3.94% Series 61 notes due 2032
450 — 
4.16% Series 54 notes due 2033
450 450 
3.90% Series 64 notes due 2033
1,200 — 
6.35% Series 4 notes due 2034
385 385 
4.39% Series 59 notes due 2034
550 550 
4.25% Series 60 notes due 2035
1,075 1,075 
4.30% Series 62 notes due 2035
300 — 
5.36% Series 9 notes due 2036
600 600 
4.89% Series 12 notes due 2037
400 400 
6.03% Series 17 notes due 2039
300 300 
5.49% Series 18 notes due 2040
500 500 
4.39% Series 23 notes due 2041
300 300 
6.59% Series 5 notes due 2043
315 315 
4.59% Series 29 notes due 2043
435 435 
4.17% Series 32 notes due 2044
350 350 
5.00% Series 11 notes due 2046
325 325 
3.91% Series 36 notes due 2046
350 350 
3.72% Series 38 notes due 2047
450 450 
3.63% Series 41 notes due 2049
750 750 
2.71% Series 47 notes due 2050
500 500 
3.64% Series 44 notes due 2050
250 250 
3.10% Series 51 notes due 2051
450 450 
4.00% Series 24 notes due 2051
225 225 
4.46% Series 55 notes due 2053
675 675 
4.85% Series 58 notes due 2054
1,000 1,000 
4.95% Series 63 notes due 2055
350 — 
4.80% Series 65 notes due 2056
400 — 
3.79% Series 26 notes due 2062
310 310 
4.29% Series 30 notes due 2064
50 50 
Hydro One Inc. long-term debt (a)18,620 17,070 
1.41% Series 2020-1 notes due 2027
425 425 
Hydro One long-term debt (b)425 425 
19,045 17,495 
Add: Net unamortized debt premiums39 41 
Add: Realized mark-to-market gain1
— 3 
Less: Unamortized deferred debt issuance costs(67)(60)
Total long-term debt19,017 17,479 
1 In October 2023, Hydro One Inc. entered into a $400 million fixed-to-floating interest-rate swap agreement to convert the $400 million Medium Term Note (MTN) Series 57 notes matured October 20, 2025, into a variable rate debt. This swap was accounted for as a fair value hedge. In December 2023, this swap was terminated with a payment received of $6 million on settlement, which had been amortized over the term of the related note.
2 The interest rates of the floating-rate notes are referenced to the daily compounded Canadian overnight repo rate average, plus a margin.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




(a) Hydro One Inc. long-term debt
As at December 31, 2025, long-term debt of $18,620 million (2024 - $17,070 million) was outstanding, the majority of which was issued under Hydro One Inc.’s MTN Program. In February 2024, Hydro One Inc. filed a short form base shelf prospectus in connection with its MTN Program, which expires in March 2026.
In 2025, Hydro One Inc. issued long-term debt totalling $2,700 million (2024 - $2,750 million) and repaid long-term debt of $1,150 million (2024 - $700 million) under the MTN Program.
(b) Hydro One long-term debt
As at December 31, 2025, long-term debt of $425 million (2024 - $425 million) was outstanding. On August 19, 2024, Hydro One filed a short form base shelf prospectus (Universal Base Shelf Prospectus) with securities regulatory authorities in Canada. The Universal Base Shelf Prospectus allows Hydro One to offer, from time to time in one or more public offerings, debt, equity or other securities, or any combination thereof, during the 25-month period ending in September 2026. As at December 31, 2025, no securities have been issued under the Universal Base Shelf Prospectus. During the years ended December 31, 2025 and 2024, no long-term debt was issued or repaid.
The total long-term debt is presented on the consolidated balance sheets as follows:
As at December 31 (millions of dollars)
20252024
Current liabilities:
    Long-term debt payable within one year925 1,150 
Long-term liabilities:
    Long-term debt18,092 16,329 
Total long-term debt19,017 17,479 
Principal and Interest Payments
As at December 31, 2025, 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 1925 792 2.8 
Year 2425 775 1.4 
Year 3750 751 4.9 
Year 41,100 724 3.5 
Year 5800 675 4.8 
4,000 3,717 3.6 
Years 6-105,760 2,800 4.2 
Thereafter9,285 4,927 4.5 
19,045 11,444 4.2 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




16.    FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Fair value is considered to be the exchange price in an orderly transaction between market participants to sell an asset or transfer a liability at the measurement date. The fair value definition focuses on an exit price, which is the price that would be received in the sale of an asset or the amount that would be paid to transfer a liability.
Hydro One classifies its fair value measurements based on the following hierarchy, as prescribed by the accounting guidance for fair value, which prioritizes the inputs to valuation techniques used to measure fair value into three levels:
Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities that Hydro One has the ability to access. An active market for the asset or liability is one in which transactions for the asset or liability occur with sufficient frequency and volume to provide ongoing pricing information.
Level 2 inputs are those other than quoted market prices included within Level 1 that are observable, either directly or indirectly, for an asset or liability. Level 2 inputs include, but are not limited to, quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active and inputs other than quoted market prices that are observable for the asset or liability, such as interest-rate curves and yield curves observable at commonly quoted intervals, volatilities, credit risk and default rates. A Level 2 measurement cannot have more than an insignificant portion of the valuation based on unobservable inputs.
Level 3 inputs are any fair value measurements that include unobservable inputs for the asset or liability for more than an insignificant portion of the valuation. A Level 3 measurement may be based primarily on Level 2 inputs.
Non-Derivative Financial Assets and Liabilities
As at December 31, 2025 and 2024, 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 carrying values and fair values of the Company’s long-term debt as at December 31, 2025 and 2024 are as follows:
2025202520242024
As at December 31 (millions of dollars)
Carrying ValueFair ValueCarrying ValueFair Value
Long-term debt, including current portion19,017 18,721 17,479 17,364 
Fair Value Measurements of Derivative Instruments
Fair Value Hedges
As at December 31, 2025 and 2024, Hydro One Inc. had no fair value hedges.
Cash Flow Hedges
As at December 31, 2025 and 2024, Hydro One Inc. had a $425 million, pay-fixed, receive-floating interest-rate swap agreement designated as a cash flow hedge. This cash flow hedge is intended to offset the variability of interest rates between December 21, 2023 and September 21, 2026.
As at December 31, 2025 and 2024, the Company had no derivative instruments classified as undesignated contracts.
Fair Value Hierarchy
The fair value hierarchy of financial assets and liabilities as at December 31, 2025 and 2024 is as follows:
As at December 31, 2025 (millions of dollars)
Carrying
Value		Fair
 Value
Level 1
Level 2
Level 3
Liabilities:
    Long-term debt, including current portion19,017 18,721 — 18,721 — 
   Derivative instruments (Note 13)
Cash flow hedges, including current portion4 4 — 4 — 
19,021 18,725 — 18,725 — 

As at December 31, 2024 (millions of dollars)
Carrying
Value		Fair
 Value
Level 1
Level 2
Level 3
Liabilities:
    Long-term debt, including current portion
17,479 17,364 — 17,364 — 
   Derivative instruments (Notes 13 & 14)
Cash flow hedges, including current portion7 7 — 7 — 
17,486 17,371 — 17,371 — 

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




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 years ended December 31, 2025 or 2024.
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.
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 point increase in interest rates associated with variable-rate debt would not have resulted in a significant decrease to Hydro One’s net income for the years ended December 31, 2025 and 2024, respectively.
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 net income or net loss in the same period during which the hedged transaction affects results of operations. The following table shows the amounts recorded in OCI/OCL and reclassified to financing charges for the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024
Amounts recorded in OCI/OCL
    Before tax loss21
    After tax loss11
Amounts reclassified to financing charges
    Before tax loss (gain)4 (4)
    After tax loss (gain)3 (3)
This resulted in an AOCL of $3 million related to cash flow hedges as at December 31, 2025 (2024 - $5 million).
The Company estimates that the amount of AOCL, after tax, related to cash flow hedges to be reclassified to results of operations in the next 12 months is approximately $3 million. Actual amounts reclassified to results of operations depend on the interest rate in effect until the derivative contracts mature. For all forecasted transactions, as at December 31, 2025, the maximum term over which the Company is hedging exposures to the variability of cash flows is less than one year.
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. As at December 31, 2025 and 2024, 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. As at December 31, 2025 and 2024, there was no material accounts receivable balance due from any single customer.
As at December 31, 2025, the Company’s allowance for doubtful accounts was $57 million (2024 - $61 million). The allowance for doubtful accounts reflects the Company's CECL for all accounts receivable balances, which are based on historical overdue balances, customer payments and write-offs. As at December 31, 2025, approximately 7% (2024 - 7%) of the Company’s net accounts receivable were outstanding for more than 60 days.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




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. As at December 31, 2025 and 2024, Hydro One’s credit exposure for all derivative instruments and applicable payables was with one financial institution with investment grade credit ratings as counterparty.
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.
In February 2024, Hydro One Inc. filed a short form base shelf prospectus in connection with its MTN Program, which expires in March 2026. Hydro One’s Universal Base Shelf Prospectus allows it to offer, from time to time in one or more public offerings, debt, equity or other securities, or any combination thereof, during the 25-month period ending on September 19, 2026.
On November 29, 2024, HOHL filed a short form base shelf prospectus (HOHL U.S. Debt Shelf Prospectus) with securities regulatory authorities in Ontario and the U.S., that expires in December 2026. The HOHL U.S. Debt Shelf Prospectus allows HOHL to offer, from time to time in one or more public offerings, debt securities, unconditionally guaranteed by Hydro One. As at December 31, 2025, no securities have been issued under the HOHL U.S. Debt Shelf Prospectus.
On August 18, 2025, Hydro One Inc. filed a short form base shelf prospectus (HOI U.S. Debt Shelf Prospectus) with securities regulatory authorities in Ontario and the U.S. The HOI U.S. Debt Shelf Prospectus allows Hydro One Inc. to offer, from time to time in one or more public offerings, U.S. debt securities, during the 25-month period ending on September 18, 2027. As at December 31, 2025, no securities have been issued under the HOI U.S. Debt Shelf Prospectus.
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.
17.    CAPITAL MANAGEMENT
The Company’s objectives with respect to its capital structure are to maintain effective access to capital on a long-term basis at reasonable rates, and to deliver appropriate financial returns. In order to ensure ongoing access to capital, the Company targets to maintain strong credit quality. As at December 31, 2025 and 2024, the Company’s capital structure was as follows:
As at December 31 (millions of dollars)
20252024
Short-term notes payable100 200 
Long-term debt payable within one year925 1,150 
Less: cash and cash equivalents(549)(716)
476 634 
Long-term debt18,092 16,329 
Common shares5,721 5,713 
Retained earnings6,911 6,360 
Total capital31,200 29,036 
Hydro One Inc. has customary covenants typically associated with long-term debt. Long-term debt and credit facility covenants limit permissible debt to 75% of its total capitalization, limit the ability to sell assets, and impose a negative pledge provision, subject to customary exceptions. As at December 31, 2025, the Company was in compliance with all financial covenants and limitations associated with the outstanding borrowings and credit facilities.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




18.    PENSION AND POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS
Hydro One has a Pension Plan, a supplementary pension plan (Supplementary Plan), post-retirement and post-employment benefit plans (Benefit Plans), and a DC Plan.
Pension Plan, Supplementary Plan, and Benefit Plans
The Pension Plan is a defined benefit contributory plan which covers eligible regular employees of Hydro One and its subsidiaries. The Pension Plan provides benefits based on the highest three-year average pensionable earnings up to March 31, 2025. Beginning April 1, 2025, all service for all groups on a go-forward basis will be calculated using the highest five-year average pensionable earnings. For management employees who commenced employment on or after January 1, 2004, and for Society-represented staff hired after November 17, 2005, benefits are based on the highest five-year average pensionable earnings for all their service. After retirement, pensions are indexed to inflation. Membership in the Pension Plan was closed to management employees who were not eligible to join the Pension Plan as of September 30, 2015. These employees are eligible to join the DC Plan.
Company and employee contributions to the Pension Plan are based on actuarial reports, including valuations performed at least every three years, and actual or projected levels of pensionable earnings, as applicable. The most recent actuarial valuation was performed effective December 31, 2024, and filed on September 23, 2025. Total annual cash Pension Plan employer contributions for 2025 were $68 million (2024 - $75 million). Estimated annual Pension Plan employer contributions for the years 2026, 2027, 2028, 2029, and 2030 are approximately $70 million, $73 million, $77 million, $81 million, and $85 million, respectively.
The Supplementary Plan provides members of the Pension Plan with benefits that would have been earned and payable under the Pension Plan beyond the limitations imposed by the Income Tax Act (Canada). The Supplementary Plan obligation is included with other post-retirement and post-employment benefit obligations on the consolidated balance sheets.
Hydro One recognizes the funded or underfunded status of the Pension Plan and Benefit Plans as an asset or liability on its consolidated balance sheets, with offsetting regulatory assets and regulatory liabilities as appropriate. The funded benefit asset and underfunded benefit obligations for the Pension Plan and Benefit Plans, in the absence of regulatory accounting, would be recognized in AOCI. The impact of changes in assumptions used to measure pension and post-retirement benefit obligations is generally recognized over the expected average remaining service period of the employees and uses the corridor approach for the post-retirement benefit plan. For the post-employment benefit plan, the impact of changes in assumptions are recognized immediately in the net periodic benefit cost. The measurement date for the Plans is December 31.
The following tables provide the components of the funded status of the Company's Pension Plans and Benefit Plans as at December 31, 2025 and 2024:

Pension Benefits
Post-Retirement and
Post-Employment Benefits
Year ended December 31 (millions of dollars)
2025202420252024
Change in PBO
PBO, beginning of year8,686 8,665 1,666 1,603 
Current service cost146 134 61 57 
Employee contributions81 74 — — 
Interest cost411 401 80 75 
Benefits paid(457)(427)(76)(71)
Net actuarial loss (gain)40 (161)19 2 
PBO, end of year8,907 8,686 1,750 1,666 
Change in plan assets
Fair value of plan assets, beginning of year9,333 8,764 — — 
Actual return on plan assets513 869 — — 
Benefits paid(457)(427)(76)(71)
Employer contributions68 75 76 71 
Employee contributions81 74 — — 
Administrative expenses(21)(22)— — 
Fair value of plan assets, end of year9,517 9,333 — — 
(Funded) unfunded status(610)(647)1,750 1,666 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Hydro One presents its benefit obligations and plan assets net on its consolidated balance sheets as follows:

Pension Benefits		Post-Retirement and
Post-Employment Benefits
As at December 31 (millions of dollars)
2025202420252024
Other assets1
11 12 — — 
Deferred pension assets610 647 — — 
Accrued liabilities— — 78 76 
Post-retirement and post-employment benefit liability— — 1,672 1,590 
Net (funded) unfunded status(621)(659)1,750 1,666 
1 Represents the funded status of HOSSM defined benefit pension plan.
The funded or unfunded status of the Pension Plan and Benefit Plans refers to the difference between the fair value of plan assets and the PBO for the Pension Plan and Benefit Plans. The funded/unfunded status changes over time due to several factors, including contribution levels, assumed discount rates and actual returns on plan assets.
The following table provides the PBO, accumulated benefit obligation (ABO) and fair value of plan assets for the Pension Plan:
As at December 31 (millions of dollars)
20252024
PBO8,907 8,686 
ABO8,004 7,848 
Fair value of plan assets9,517 9,333 
On an ABO basis, the Pension Plan was funded at 119% as at December 31, 2025 (2024 - 119%). On a PBO basis, the Pension Plan was funded at 107% as at December 31, 2025 (2024 - 107%). The ABO differs from the PBO in that the ABO includes no assumption about future compensation levels.
Components of Net Periodic Benefit Costs
The following table provides the components of the net periodic benefit costs of the Pension Plan for the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024
Current service cost146 134 
Interest cost411 401 
Expected return on plan assets, net of expenses(663)(603)
Amortization of prior service credit(3)(3)
Amortization of actuarial (gains) losses(15)14 
Net periodic benefit credit(124)(57)
Charged to results of operations1
21 23 
1    The Company accounts for pension costs consistent with their inclusion in OEB-approved rates. During the year ended December 31, 2025, pension costs of $68 million (2024 - $75 million) comprised of $21 million (2024 - $23 million) charged to operations, and $47 million (2024 - $52 million) capitalized as part of the cost of property, plant and equipment and intangible assets.
The following table provides the components of the net periodic benefit costs for the years ended December 31, 2025 and 2024 for the post-retirement and post-employment benefit plans:
Year ended December 31 (millions of dollars)
20252024
Current service cost61 57 
Interest cost80 75 
Amortization of prior service cost10 10 
Amortization of actuarial gains(23)(29)
Net periodic benefit costs128 113 
Charged to results of operations1
86 74 
1    The Company accounts for post-retirement and post-employment costs consistent with their inclusion in OEB-approved rates. During the year ended December 31, 2025, post-retirement and post-employment costs of $128 million (2024 - $113 million) were attributed to labour, of which $86 million (2024 - $74 million) was charged to operations, and $42 million (2024 - $39 million) was capitalized as part of the cost of property, plant and equipment and intangible assets.
Assumptions
The measurement of the obligations of the Pension Plan and Benefit Plans and the costs of providing benefits under the Pension Plan and Benefit Plans involves various factors, including the development of valuation assumptions and accounting policy elections. When developing the required assumptions, the Company considers historical information as well as future expectations. The measurement of benefit obligations and costs is impacted by several assumptions including the discount rate applied to benefit obligations, the long-term expected rate of return on plan assets, Hydro One’s expected level of contributions

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




to the Pension Plan and Benefit Plans, the incidence of mortality, the expected remaining service period of plan participants, the level of compensation and rate of compensation increases, employee age, length of service, and the anticipated rate of increase of health care costs, among other factors. The impact of changes in assumptions used to measure the obligations of the Pension Plan and Benefit Plans is generally recognized over the expected average remaining service period of the plan participants. In selecting the expected rate of return on plan assets, Hydro One considers historical economic indicators that impact asset returns, as well as expectations regarding future long-term capital market performance, weighted by target asset class allocations. In general, equity securities, real estate and private equity investments are forecasted to have higher returns than fixed-income securities.
The following weighted average assumptions were used to determine the benefit obligations as at December 31, 2025 and 2024:

Pension Benefits		Post-Retirement and
Post-Employment Benefits
Year ended December 312025202420252024
Significant assumptions:
    Weighted average discount rate5.02 %4.73 %5.05 %4.75 %
    Rate of compensation scale escalation (long-term)2.50 %2.50 %2.50 %2.50 %
    Rate of cost of living increase2.00 %2.00 %2.00 %2.00 %
    Rate of increase in health care cost trends1
— — 4.25 %4.23 %
1 4.79% per annum in 2026, grading down to 4.25% per annum in and after 2032 (2024 - 4.85% per annum in 2025, grading down to 4.23% per annum in and after 2032).
The following weighted average assumptions were used to determine the net periodic benefit costs for the years ended December 31, 2025 and 2024. Assumptions used to determine current year-end benefit obligations are the assumptions used to estimate the subsequent year’s net periodic benefit costs.
Year ended December 3120252024
Pension Benefits:
    Weighted average expected rate of return on plan assets7.20 %7.00 %
    Weighted average discount rate4.73 %4.63 %
    Rate of compensation scale escalation (long-term)2.50 %2.50 %
    Rate of cost of living increase2.00 %2.00 %
    Average remaining service life of employees (years)
1515
Post-Retirement and Post-Employment Benefits:
    Weighted average discount rate4.75 %4.63 %
    Rate of compensation scale escalation (long-term)2.50 %2.50 %
    Rate of cost of living increase2.00 %2.00 %
    Average remaining service life of employees (years)
16.516.1
    Rate of increase in health care cost trends1
4.23 %4.23 %
1 4.85% per annum in 2025, grading down to 4.23% per annum in and after 2032 (2024 - 4.92% per annum in 2024, grading down to 4.23% per annum in and after 2032).
The discount rate used to determine the current year pension obligation and the subsequent year’s net periodic benefit costs is based on a yield curve approach. Under the yield curve approach, expected future benefit payments for each plan are discounted by a rate on a third-party bond yield curve corresponding to each duration. The yield curve is based on “AA” long-term corporate bonds. A single discount rate is calculated that would yield the same present value as the sum of the discounted cash flows.
The following approximate life expectancies were used in the mortality assumptions to determine the PBO for the Pension Plan and Benefit Plans as at December 31, 2025 and 2024:
As at December 3120252024
Life expectancy at age 65 for a member currently at:(years)(years)
    Age 65 - male2423
    Age 65 - female2725
    Age 45 - male2624
    Age 45 - female2826

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Estimated Future Benefit Payments
As at December 31, 2025, estimated future benefit payments to the participants of the Benefit Plans were:

(millions of dollars)
Pension Benefits		Post-Retirement and
Post-Employment Benefits
2026427 78 
2027433 78 
2028439 78 
2029445 79 
2030452 80 
2031 through to 20352,397 423 
Total estimated future benefit payments through to 20354,593 816 
Components of Regulatory Accounts
A portion of actuarial gains and losses and prior service costs is recorded within regulatory accounts on Hydro One’s consolidated balance sheets to reflect the expected regulatory inclusion of these amounts in future rates, which would otherwise be recorded in OCI. These amounts are reflected in the following table:
Year ended December 31 (millions of dollars)
20252024
Pension Benefits:
    Net actuarial loss (gain) for the year210 (405)
    Amortization of actuarial gain (loss)15 (14)
    Amortization of prior service credit3 3 
    228 (416)
Post-Retirement and Post-Employment Benefits:
    Actuarial loss for the year28 4 
    Amortization of actuarial loss15 18 
    43 22 
The following table provides the components of regulatory accounts that have not been recognized as components of net periodic benefit costs for the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024
Pension Benefits:
    Actuarial gain(610)(647)
Post-Retirement and Post-Employment Benefits:
    Actuarial gain(336)(376)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Pension Plan Assets
Investment Strategy
On a regular basis, Hydro One evaluates its investment strategy to ensure that Pension Plan assets will be sufficient to pay Pension Plan benefits when it comes due. As part of this ongoing evaluation, Hydro One may make changes to its targeted asset allocation and investment strategy. The Pension Plan is managed at a net asset level. The main objective of the Pension Plan is to sustain a certain level of net assets in order to meet the pension obligations of the Company. The Pension Plan fulfils its primary objective by adhering to specific investment policies outlined in its Statement of Investment Policies and Procedures (SIPP), which is reviewed and approved annually by the Human Resource Committee of Hydro One’s Board of Directors. The Company manages net assets by engaging external investment managers who are charged with the fiduciary responsibility of investing existing funds and new funds (current year’s employee and employer contributions) in accordance with the approved SIPP. The performance of the underlying investment managers is monitored through a governance structure. Increases in net assets are a direct result of investment income generated by investments held by the Pension Plan and contributions to the Pension Plan by eligible employees and by the Company. The main use of net assets is for benefit payments to eligible Pension Plan members. 
Pension Plan Asset Mix
As at December 31, 2025, the Pension Plan actual weighted average, target, and range asset allocations were as follows:
Actual (%)Target Allocation (%)Range Allocation (%)
Equity securities41 40 
20 - 55
Debt securities37 35 
30 - 40
Real Estate and Infrastructure22 25 
0 - 35
100 100 
As at December 31, 2025, the Pension Plan held $17 million (2024 - $16 million) Hydro One Inc.’s corporate bonds and $631 million (2024 - $703 million) of debt securities of the Province.
Concentrations of Credit Risk
Hydro One evaluated its Pension Plan’s asset portfolio for the existence of significant concentrations of credit risk as at December 31, 2025 and 2024. Concentrations that were evaluated include, but are not limited to, investment concentrations in a single entity, concentrations in a type of industry, and concentrations in individual funds. As at December 31, 2025 and 2024, there were no significant concentrations (defined as greater than 10% of plan assets) of risk in the Pension Plan’s assets.
The Pension Plan's Statement of Investment Beliefs and Guidelines provides guidelines and restrictions for eligible investments taking into account credit ratings, maximum investment exposure and other controls in order to limit the impact of this risk. The Pension Plan manages its counterparty credit risk with respect to bonds by investing in investment-grade and government bonds and with respect to derivative instruments by transacting only with highly rated financial institutions, and also by ensuring that exposure is diversified across counterparties. The risk of default on transactions in listed securities is considered minimal, as the trade will fail if either party to the transaction does not meet its obligation.
Fair Value Measurements
The following tables present the Pension Plan assets and liabilities measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as at December 31, 2025 and 2024:
As at December 31, 2025 (millions of dollars)
Level 1Level 2Level 3Total
Pooled funds— — 3,277 3,277 
Cash and cash equivalents124 — — 124 
Short-term securities— 182 — 182 
Derivative instruments— 2 — 2 
Corporate shares - Canadian102 — — 102 
Corporate shares - Foreign2,736 255 — 2,991 
Bonds and debentures - Canadian — 2,677 — 2,677 
Bonds and debentures - Foreign— 106 — 106 
Total fair value of plan assets1
2,962 3,222 3,277 9,461 
Derivative instruments— 1 — 1 
Total fair value of plan liabilities1
— 1 — 1 
1 As at December 31, 2025, the total fair value of Pension Plan assets and liabilities excludes $62 million of interest and dividends receivable, $4 million of sold investments receivable, $5 million of pension administration expenses payable, $2 million of taxes payable, $nil payable to participants, and $2 million of purchased investments payable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




As at December 31, 2024 (millions of dollars)
Level 1Level 2Level 3Total
Pooled funds— — 3,142 3,142 
Cash and cash equivalents106 — — 106 
Short-term securities— 171 — 171 
Derivative instruments— 1 — 1 
Corporate shares - Canadian116 — — 116 
Corporate shares - Foreign2,695 247 — 2,942 
Bonds and debentures - Canadian— 2,717 — 2,717 
Bonds and debentures - Foreign— 95 — 95 
Total fair value of plan assets1
2,917 3,231 3,142 9,290 
Derivative instruments— 3 — 3 
Total fair value of plan liabilities1
— 3 — 3 
1 As at December 31, 2024, the total fair value of Pension Plan assets and liabilities excludes $57 million of interest and dividends receivable, $1 million of sold investments receivable, $6 million of pension administration expenses payable, $2 million of taxes payable, $3 million payable to participants, and $1 million of purchased investments payable.
See Note 16 - Fair Value of Financial Instruments and Risk Management for a description of levels within the fair value hierarchy.
Changes in the Fair Value of Financial Instruments Classified in Level 3
The following table summarizes the changes in fair value of financial instruments classified in Level 3 for the years ended December 31, 2025 and 2024. The Pension Plan classifies financial instruments as Level 3 when the fair value is measured based on at least one significant input that is not observable in the markets or due to lack of liquidity in certain markets. The gains and losses presented in the table below could, therefore, include changes in fair value based on both observable and unobservable inputs. The Level 3 financial instruments are comprised of pooled funds whose valuations are provided by the investment managers. Sensitivity analysis is not provided as the underlying assumptions used by the investment managers are not available.
Year ended December 31 (millions of dollars)
20252024
Fair value, beginning of year3,142 2,769 
Realized and unrealized gains 136 262 
Purchases138 203 
Sales and disbursements(139)(92)
Fair value, end of year3,277 3,142 
There were no transfers between any of the fair value levels during the years ended December 31, 2025 and 2024.
Valuation Techniques Used to Determine Fair Value
Pooled funds mainly consist of private equity, real estate infrastructure and private debt investments. Private equity investments represent private equity funds that invest in operating companies that are not publicly traded on a stock exchange. Investment strategies in private equity include limited partnerships in businesses that are characterized by high internal growth and operational efficiencies, venture capital, leveraged buyouts and special situations such as distressed investments. Real estate and infrastructure investments represent funds that invest in real assets which are not publicly traded on a stock exchange. Investment strategies in real estate include limited partnerships that seek to generate a total return through income and capital growth by investing primarily in global and Canadian limited partnerships. Investment strategies in infrastructure include limited partnerships in core infrastructure assets focusing on assets that are expected to generate stable, long-term cash flows and deliver incremental returns relative to conventional fixed-income investments. Private equity, real estate and infrastructure valuations are reported by the fund manager and are based on the valuation of the underlying investments which includes inputs such as cost, operating results, discounted future cash flows and market-based comparable data. Private debt valuations are reported by the fund manager. Private debt is credit that is extended to companies on a bilaterally negotiated basis. It is not readily marketable and takes a wide range of forms, such as senior secured and unsecured loans, infrastructure project financing, investments secured by real estate assets, and securitized lease/loan obligations supported by a pool of assets. Since these valuation inputs are not highly observable, private equity, real estate infrastructure and private debt investments have been categorized as Level 3 within pooled funds.
Cash equivalents consist of demand cash deposits held with banks and cash held by the investment managers. Cash equivalents are categorized as Level 1.
Short-term securities are valued at cost plus accrued interest, which approximates fair value due to their short-term nature. Short-term securities are categorized as Level 2.
Derivative instruments are used to hedge the Pension Plan’s foreign currency exposure back to Canadian dollars. The notional principal amount of contracts outstanding as at December 31, 2025 was $405 million (2024 - $391 million). The most significant currencies being hedged against the Canadian dollar are the United States dollar, euro, and British pound sterling. The net

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




realized loss on contracts for the year ended December 31, 2025 was $4 million (2024 - $3 million net realized loss). The terms to maturity of the forward exchange contracts as at December 31, 2025 are within three months. The fair value is determined using standard interpolation methodology primarily based on the World Markets exchange rates. Derivative instruments are categorized as Level 2.
Corporate shares are valued based on quoted prices in active markets and are categorized as Level 1. Corporate shares which are valued based on quoted prices in active markets, but held within a pension investment holding company, are categorized as Level 2. Investments denominated in foreign currencies are translated into Canadian currency at year-end rates of exchange.
Bonds and debentures are presented at published closing trade quotations and are categorized as Level 2.
DC Plan
Hydro One established a DC Plan effective January 1, 2016. The DC Plan covers eligible management employees hired on or after January 1, 2016, as well as management employees hired before January 1, 2016 who were not eligible to join the Pension Plan as of September 30, 2015. Members of the DC Plan have an option to contribute 4%, 5% or 6% of their pensionable earnings, with matching contributions by Hydro One up to an annual contribution limit. There is also a Supplementary Notional Plan that provides members of the DC Plan with employer contributions beyond the limitations imposed by the Income Tax Act (Canada) in the form of credits to a notional account. Hydro One contributions to the DC Plan for the year ended December 31, 2025 were $5 million (2024 - $5 million).
19.    ENVIRONMENTAL LIABILITIES
The following tables show the movements in environmental liabilities for the years ended December 31, 2025 and 2024:
Year ended December 31, 2025 (millions of dollars)
PCBLARTotal
Environmental liabilities - beginning6 41 47 
Expenditures(4)(1)(5)
Revaluation adjustment(1)3 2 
Environmental liabilities - ending1 43 44 
Less: current portion(1)(6)(7)



— 37 37 
Year ended December 31, 2024 (millions of dollars)
PCBLARTotal
Environmental liabilities - beginning39 40 79 
Expenditures(34)(3)(37)
Revaluation adjustment1 4 5 
Environmental liabilities - ending6 41 47 
Less: current portion(6)(5)(11)
— 36 36 
As at December 31, 2025, the estimated future environmental expenditures were as follows:
(millions of dollars)
20267 
20276 
20282 
20291 
20302 
Thereafter26 
44 
There are uncertainties in estimating future environmental costs due to potential external events such as changes in legislation or regulations, and advances in remediation technologies. In determining the amounts to be recorded as environmental liabilities, the Company estimates the current cost of completing required work and makes assumptions as to when the future expenditures will actually be incurred in order to generate future cash flow information. All factors used in estimating the Company’s environmental liabilities represent management’s best estimates of the present value of costs required to meet existing legislation or regulations. However, it is reasonably possible that numbers or volumes of contaminated assets, cost estimates to perform work, inflation assumptions and the assumed pattern of annual cash flows may differ significantly from the Company’s current assumptions. In addition, with respect to the PCB environmental liability, the availability of critical resources such as skilled labour and replacement assets and the ability to take maintenance outages in critical facilities may influence the timing of expenditures.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




PCBs
Environment and Climate Change Canada regulations, enacted under the Canadian Environmental Protection Act, 1999, govern the management, storage and disposal of PCBs based on certain criteria, including type of equipment, in-use status, and PCB-contamination thresholds. Under previous regulations, Hydro One’s PCBs were to be disposed of by the end of 2025, with the exception of specifically exempted equipment. On December 31st, 2025, regulations amending the Canadian Environmental Protection Act, 1999 were published in the Canada Gazette, Part II. The amendments include deferring the end-of-use deadline for certain PCB-containing electrical equipment from December 31, 2025 to December 31, 2026. Contaminated equipment will generally be replaced, or will be decontaminated by removing PCB-contaminated insulating oil and retro filling with replacement oil that contains PCBs in concentrations of less than 2 ppm.
As at December 31, 2025, the Company’s best estimate of the total future expenditures to comply with current PCB regulations was $1 million (2024 - $6 million). These expenditures are expected to be incurred in 2026. As a result of its annual review of environmental liabilities, the Company recorded a revaluation adjustment in 2025 to decrease the PCB environmental liability by $1 million (2024 - increase of $1 million).
LAR
As at December 31, 2025, the Company’s best estimate of the total estimated future expenditures to complete its LAR program was $43 million (2024 - $41 million). These expenditures are expected to be incurred over the period from 2026 to 2051. As a result of its annual review of environmental liabilities, the Company recorded a revaluation adjustment in 2025 to increase the LAR environmental liability by $3 million (2024 - $4 million).
20.    ASSET RETIREMENT OBLIGATIONS
Hydro One records a liability for the estimated future expenditures for the removal and disposal of asbestos-containing materials installed in some of its facilities, as well as for the estimated expenditure for the future decommissioning and removal of some diesel generating stations and related assets operated by its subsidiary, Hydro One Remotes.
Asset retirement obligations, which represent legal obligations associated with the retirement of certain tangible long-lived assets, are computed as the present value of the projected expenditures for the future retirement of specific assets and are recognized in the period in which the liability is incurred, if a reasonable estimate can be made. If the asset remains in service at the recognition date, the present value of the liability is added to the carrying amount of the associated asset in the period the liability is incurred and this additional carrying amount is depreciated over the remaining life of the asset. If an asset retirement obligation is recorded in respect of an out-of-service asset, the asset retirement cost is charged to results of operations. Subsequent to the initial recognition, the liability is adjusted for any revisions to the estimated future cash flows associated with the asset retirement obligation, which can occur due to a number of factors including, but not limited to, cost escalation, changes in technology applicable to the assets to be retired, changes in legislation or regulations, as well as for accretion of the liability due to the passage of time until the obligation is settled. Depreciation expense is adjusted prospectively for any increases or decreases to the carrying amount of the associated asset.
Some of the Company’s transmission and distribution assets, particularly those located on unowned easements and rights-of-way, may have asset retirement obligations, conditional or otherwise. The majority of the Company’s easements and rights-of-way are either of perpetual duration or are automatically renewed annually. Land rights with finite terms are generally subject to extension or renewal. As the Company expects to use the majority of its facilities in perpetuity, no asset retirement obligations have been recorded for these assets. If, at some future date, a particular facility is shown not to meet the perpetuity assumption, it will be reviewed to determine whether an estimable asset retirement obligation exists. In such a case, an asset retirement obligation would be recorded at that time.
In determining the amounts to be recorded as asset retirement obligations, the Company estimates the current fair value for completing required work and makes assumptions as to when the future expenditures will actually be incurred, in order to generate future cash flow information. A long-term inflation assumption of approximately 2% has been used to express these current cost estimates as estimated future expenditures. Future expenditures have been discounted using factors ranging from approximately 1.0% to 3.0% (2024 - 1.0% to 3.0%) depending on the appropriate rate for the period when expenditures are expected to be incurred. All factors used in estimating the Company’s asset retirement obligations represent management’s best estimates of the cost required to meet existing legislation or regulations. However, it is reasonably possible that numbers or volumes of contaminated assets, cost estimates to perform work, inflation assumptions and the assumed pattern of annual cash flows may differ significantly from the Company’s current assumptions. Asset retirement obligations are reviewed annually or more frequently if significant changes in regulations or other relevant factors occur. Estimate changes are accounted for prospectively. As a result of its annual review of asset retirement obligations, the Company recorded a revaluation adjustment in 2025 to increase the asset retirement obligations related to the removal and disposal of asbestos-containing materials installed in some of its facilities by $3 million (2024 - $nil) and the asset retirement obligations related to decommissioning and removal of diesel generating station within the Hydro One Remotes operating territory by $1 million (2024 - $2 million).

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




As at December 31, 2025, Hydro One had recorded total asset retirement obligations of $43 million (2024 - $38 million), primarily consisting of the estimated future expenditures associated with the removal and disposal of asbestos-containing materials installed in some of its facilities of $22 million (2024 - $18 million), and the decommissioning and removal of diesel generating stations of $20 million (2024 - $19 million).
21.    LEASES
Hydro One has operating lease contracts for buildings used in administrative and service-related functions and storing telecommunications equipment. These leases have terms between three and five years with renewal options of additional three- to five-year terms at prevailing market rates at the time of extension. All leases include a clause to enable upward revision of the rental charge on an annual basis or on renewal according to prevailing market conditions or pre-established rents. There are no restrictions placed upon Hydro One by entering into these leases. Renewal options are included in the lease term when their exercise is reasonably certain. The Company also has a few finance lease arrangements, all of which were fully prepaid at commencement and are immaterial to the consolidated financial statements. Other information related to the Company's operating leases was as follows:
Year ended December 31 (millions of dollars)
20252024
Lease expense1717
Lease payments made1716
As at December 3120252024
Weighted-average remaining lease term1 (years)
34
Weighted-average discount rate 2.8 %2.9 %
1 Includes renewal options that are reasonably certain to be exercised.
As at December 31, 2025, future minimum operating lease payments were as follows:
 (millions of dollars)
202616 
202714 
202810 
20293 
20301 
Thereafter1 
Total undiscounted minimum lease payments45 
Less: discounting minimum lease payments to present value (2)
Total discounted minimum lease payments43 
As at December 31, 2024, future minimum operating lease payments were as follows:
(millions of dollars)
202517 
202615 
202713 
202810 
20292 
Thereafter2 
Total undiscounted minimum lease payments59 
Less: discounting minimum lease payments to present value(4)
Total discounted minimum lease payments55 
Hydro One presents its ROU assets and lease obligations on the consolidated balance sheets as follows:
As at December 31 (millions of dollars)
20252024
Other long-term assets (Note 12)
47 55 
Accounts payable and other current liabilities (Note 13)
14 14 
Other long-term liabilities (Note 14)
29 41 

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




22.    SHARE CAPITAL
Common Shares
The Company is authorized to issue an unlimited number of common shares. As at December 31, 2025, the Company had 599,781,811 (2024 - 599,435,650) common shares issued and outstanding.
The amount and timing of any dividends payable by Hydro One is at the discretion of the Hydro One Board of Directors and is established on the basis of Hydro One’s results of operations, maintenance of its deemed regulatory capital structure, financial condition, cash requirements, the satisfaction of solvency tests imposed by corporate laws for the declaration and payment of dividends and other factors that the Board of Directors may consider relevant.
The following tables presents the changes to common shares during the years ended December 31, 2025 and 2024:
Ownership by
Year ended December 31, 2025 (number of shares)
Public
Province
Total
Common shares - beginning317,023,002282,412,648599,435,650
Common shares issued - LTIP1
10,492—10,492
Common shares issued - share grants2
335,669—335,669
Common shares - ending317,369,163282,412,648599,781,811
52.9 %47.1 %100 %
1 In 2025, Hydro One issued 10,492 common shares from treasury in accordance with provisions of the LTIP.
2 In 2025, Hydro One issued 335,669 common shares from treasury in accordance with provisions of the Power Workers’ Union (PWU) and the Society Share Grant Plans.
                            Ownership by
Year ended December 31, 2024 (number of shares)
Public
Province
Total
Common shares - beginning316,664,419282,412,648599,077,067
Common shares issued - LTIP1
9,905—9,905
Common shares issued - share grants2
348,678—348,678
Common shares - ending317,023,002282,412,648599,435,650
52.9 %47.1 %100 %
1 In 2024, Hydro One issued 9,905 common shares from treasury in accordance with provisions of the LTIP.
2 In 2024, Hydro One issued 348,678 common shares from treasury in accordance with provisions of the PWU and the Society Share Grant Plans.

Preferred Shares
The Company is authorized to issue an unlimited number of preferred shares, issuable in series. As at December 31, 2025 and 2024, two series of preferred shares were authorized for issuance: the Series 1 preferred shares and the Series 2 preferred shares. As at December 31, 2025, and 2024, the Company had no Series 1 preferred shares and no Series 2 preferred shares issued and outstanding.
Hydro One may from time to time issue preferred shares in one or more series. Prior to issuing shares in a series, the Hydro One Board of Directors is required to fix the number of shares in the series and determine the designation, rights, privileges, restrictions and conditions attaching to that series of preferred shares. Holders of Hydro One’s preferred shares are not entitled to receive notice of, to attend or to vote at any meeting of the shareholders of Hydro One except that votes may be granted to a series of preferred shares when dividends have not been paid on any one or more series as determined by the applicable series provisions. Each series of preferred shares ranks on parity with every other series of preferred shares, and are entitled to a preference over the common shares and any other shares ranking junior to the preferred shares, with respect to dividends and the distribution of assets and return of capital in the event of the liquidation, dissolution or winding up of Hydro One.
Share Ownership Restrictions
The Electricity Act imposes share ownership restrictions on securities of Hydro One carrying a voting right (Voting Securities). These restrictions provide that no person or company (or combination of persons or companies acting jointly or in concert) may beneficially own or exercise control or direction over more than 10% of any class or series of Voting Securities, including common shares of the Company (Share Ownership Restrictions). The Share Ownership Restrictions do not apply to Voting Securities held by the Province, nor to an underwriter who holds Voting Securities solely for the purpose of distributing those securities to purchasers who comply with the Share Ownership Restrictions.
23.    DIVIDENDS
In 2025, common share dividends in the amount of $788 million (2024 - $743 million) were declared and paid.
See Note 32 - Subsequent Events for dividends declared subsequent to December 31, 2025.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




24.    EARNINGS PER COMMON SHARE
Basic earnings per common share (EPS) is calculated by dividing net income attributable to common shareholders of Hydro One by the weighted-average number of common shares outstanding.
Diluted EPS is calculated by dividing net income attributable to common shareholders of Hydro One by the weighted-average number of common shares outstanding adjusted for the effects of potentially dilutive stock-based compensation plans, including the share grant plans and LTIP, which are calculated using the treasury stock method.
20252024
Net income attributable to common shareholders (millions of dollars)
1,339 1,156 
Weighted-average number of shares
    Basic599,692,817 599,342,299 
        Effect of dilutive stock-based compensation plans1,020,183 1,318,179 
    Diluted600,713,000 600,660,478 
EPS
    Basic$2.23$1.93
    Diluted$2.23$1.92
25.    STOCK-BASED COMPENSATION
Share Grant Plans
Hydro One has two share grant plans (Share Grant Plans), one for the benefit of certain members of the PWU (PWU Share Grant Plan) and one for the benefit of certain members of the Society (Society Share Grant Plan).
The PWU Share Grant Plan provides for the issuance of common shares of Hydro One from treasury to certain eligible members of the PWU annually, commencing on April 1, 2017 and continuing until the earlier of April 1, 2028 or the date an eligible employee no longer meets the eligibility criteria of the PWU Share Grant Plan. To be eligible, an employee must be a member of the Pension Plan on April 1, 2015, be employed on the date that the annual share issuance occurs and continue to have under 35 years of service. The requisite service period for the PWU Share Grant Plan began on July 3, 2015, which is the date that the share grant plan was ratified by the PWU. The number of common shares issued annually to each eligible employee will be equal to 2.7% of such eligible employee’s salary as of April 1, 2015, divided by $20.50, being the price of the common shares of Hydro One in its Initial Public Offering (IPO). The aggregate number of common shares issuable under the PWU Share Grant Plan shall not exceed 3,981,763 common shares. In 2015, 3,979,062 common shares were granted under the PWU Share Grant Plan.
The Society Share Grant Plan provides for the issuance of common shares of Hydro One from treasury to certain eligible members of the Society annually, commencing on April 1, 2018 and continuing until the earlier of April 1, 2029 or the date an eligible employee no longer meets the eligibility criteria of the Society Share Grant Plan. To be eligible, an employee must be a member of the Pension Plan on September 1, 2015, be employed on the date that the annual share issuance occurs and continue to have under 35 years of service. Therefore, the requisite service period for the Society Share Grant Plan began on September 1, 2015. The number of common shares issued annually to each eligible employee will be equal to 2.0% of such eligible employee’s salary as of September 1, 2015, divided by $20.50, being the price of the common shares of Hydro One in its IPO. The aggregate number of common shares issuable under the Society Share Grant Plan shall not exceed 1,434,686 common shares. In 2015, 1,433,292 common shares were granted under the Society Share Grant Plan.
The fair value of the Hydro One 2015 share grants of $111 million was estimated based on the grant date share price of $20.50 and is recognized using the graded-vesting attribution method as the share grant plans have both a performance condition and a service condition. In 2025, 335,669 common shares (2024 - 348,678) were issued under the Share Grant Plans. Total share-based compensation recognized during 2025 was $1 million (2024 - $2 million) and was recorded as a regulatory asset.
A summary of share grant activity under the Share Grant Plans during the years ended December 31, 2025 and 2024 is presented below:

Year ended December 31, 2025
Share Grants
(number of common shares)
Weighted-Average
Price
Share grants outstanding - beginning1,407,294 $20.50 
    Vested and issued1
(335,669)— 
    Forfeited(46,481)$20.50 
Share grants outstanding - ending1,025,144 $20.50 
    
1    In 2025, Hydro One issued 335,669 common shares from treasury to eligible employees in accordance with provisions of the Share Grant Plans.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024





Year ended December 31, 2024
Share Grants
(number of common shares)
Weighted-Average
Price
Share grants outstanding - beginning1,782,376 $20.50 
    Vested and issued1
(348,678)— 
    Granted1,092 — 
    Forfeited(27,496)$20.50 
Share grants outstanding - ending1,407,294 $20.50 
1    In 2024, Hydro One issued 348,678 common shares from treasury to eligible employees in accordance with provisions of the Share Grant Plans.
Directors' DSU Plan
Under the Directors’ DSU Plan, directors can elect to receive credit for their annual cash retainer in a notional account of DSUs in lieu of cash. Hydro One’s Board of Directors may also determine from time to time that special circumstances exist that would reasonably justify the grant of DSUs to a director as compensation in addition to any regular retainer or fee to which the director is entitled. Each DSU represents a unit with an underlying value equivalent to the value of one common share of the Company and is entitled to accrue common share dividend equivalents in the form of additional DSUs at the time dividends are paid, subsequent to declaration by Hydro One’s Board of Directors.
A summary of DSU awards activity under the Directors' DSU Plan during the years ended December 31, 2025 and 2024 is presented below:
Year ended December 31 (number of DSUs)
20252024
DSUs outstanding - beginning107,296 94,624 
    Granted21,033 22,293 
    Settled(26,073)(9,621)
DSUs outstanding - ending102,256 107,296 
For the year ended December 31, 2025, an expense of $2 million (2024 - $1 million) was recognized in earnings with respect to the Directors' DSU Plan. As at December 31, 2025, a liability of $6 million (2024 - $5 million) related to Directors' DSUs has been recorded at the closing price of the Company's common shares of $54.64. This liability is included in other long-term liabilities on the consolidated balance sheets.
Management DSU Plan
Under the Management DSU Plan, eligible executive employees can elect to receive a specified proportion of their annual short-term incentive in a notional account of DSUs in lieu of cash. Each DSU represents a unit with an underlying value equivalent to the value of one common share of the Company and is entitled to accrue common share dividend equivalents in the form of additional DSUs at the time dividends are paid, subsequent to declaration by Hydro One’s Board of Directors.
A summary of DSU awards activity under the Management DSU Plan during the years ended December 31, 2025 and 2024 is presented below:
Year ended December 31 (number of DSUs)
20252024
DSUs outstanding - beginning85,690 134,370 
    Granted14,219 16,600 
    Settled(19,505)(65,280)
DSUs outstanding - ending80,404 85,690 
For the year ended December 31, 2025, an expense of $2 million (2024 - $1 million) was recognized in earnings with respect to the Management DSU Plan. As at December 31, 2025, a liability of $4 million (2024 - $4 million) related to Management DSUs has been recorded at the closing price of the Company's common shares of $54.64. This liability is included in other long-term liabilities on the consolidated balance sheets.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




Employee Share Ownership Plan
In 2015, Hydro One established Employee Share Ownership Plans (ESOP) for certain eligible management and non-represented employees (Management ESOP) and for certain eligible Society-represented staff (Society ESOP). Under the Management ESOP, the eligible management and non-represented employees may contribute between 1% and 6% of their base salary towards purchasing common shares of Hydro One. The Company matches 50% of their contributions, up to a maximum Company contribution of $25,000 per calendar year. Under the Society ESOP, the eligible Society-represented staff may contribute between 1% and 4% of their base salary towards purchasing common shares of Hydro One. The Company matches 25% of their contributions, with no maximum Company contribution per calendar year.
In 2024, Hydro One established ESOP for certain eligible PWU represented staff (PWU ESOP). Under the PWU ESOP, the eligible PWU-represented staff may contribute between 1% and 4% of their base salary towards purchasing common shares of Hydro One. The Company matches 33% of their contribution, with no maximum Company contribution per calendar year. In 2025, Company contributions made under the ESOP were $9 million (2024 - $5 million).
LTIP
Effective August 31, 2015, the Board of Directors of Hydro One adopted an LTIP. Under the LTIP, long-term incentives were granted to certain executive and management employees of Hydro One and its subsidiaries, and all equity-based awards would either be settled in newly issued shares of Hydro One from treasury or cash, subject to Hydro One’s discretion, consistent with the provisions of the plan which also permit the participants to surrender a portion of their awards to satisfy related withholding taxes requirements. The aggregate number of shares issuable under the LTIP shall not exceed 11,900,000 shares of Hydro One.
The LTIP provides flexibility to award a range of vehicles, including Performance Share Units (PSUs), Restricted Share Units (RSUs), stock options, share appreciation rights, restricted shares, DSUs, and other share-based awards. The mix of vehicles is intended to vary by role to recognize the level of executive accountability for overall business performance.
PSUs and RSUs
A summary of PSU and RSU awards activity under the LTIP during the years ended December 31, 2025 and 2024 is presented below:
                                PSUs                               RSUs
Year ended December 31 (number of units)
2025202420252024
Units outstanding - beginning286,554 142,925 322,925 186,971 
    Granted179,731 189,104 154,754 158,757 
    Forfeited(45,655)(24,918)(60,660)(20,377)
 Vested and issued(21,449)(20,557)(25,396)(2,426)
Units outstanding - ending399,181 286,554 391,623 322,925 
The grant date total fair value of the awards granted during the year ended December 31, 2025 was $16 million (2024 - $14 million). The compensation expense related to the PSU and RSU awards recognized by the Company during the year ended December 31, 2025 was $11 million (2024 - $10 million).
26.    NONCONTROLLING INTEREST
Total noncontrolling interest consists of noncontrolling interests attributable to B2M LP, NRLP and CLLP. The following tables show the movements in total noncontrolling interest during the years ended December 31, 2025 and 2024:
Year ended December 31, 2025 (millions of dollars)
Temporary EquityEquityTotal
Noncontrolling interest - beginning19 65 84 
Contributions from sale of noncontrolling interest — 16 16 
Net income attributable to noncontrolling interest2 8 10 
Distributions to noncontrolling interest(2)(10)(12)
Noncontrolling interest - ending19 79 98 

Year ended December 31, 2024 (millions of dollars)
Temporary EquityEquityTotal
Noncontrolling interest - beginning20 65 85 
Net income attributable to noncontrolling interest2 7 9 
Distributions to noncontrolling interest(3)(7)(10)
Noncontrolling interest - ending19 65 84 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




B2M LP
On December 17, 2014, the Saugeen Ojibway Nation (SON) acquired a 34.2% equity interest in B2M LP for consideration of $72 million, representing the fair value of the equity interest acquired. The SON’s investment in B2M LP consists of $50 million of Class A units and $22 million of Class B units.
The Class B units have a mandatory put option which requires that upon the occurrence of an enforcement event (i.e., an event of default such as a debt default by the SON or insolvency event), Hydro One purchases the Class B units of B2M LP for net book value on the redemption date. The noncontrolling interest relating to the Class B units is classified on the consolidated balance sheet as temporary equity because the redemption feature is outside the control of the Company. The balance of the noncontrolling interest is classified within equity.
The following tables show the movements in B2M LP noncontrolling interest during the years ended December 31, 2025 and 2024:
Year ended December 31, 2025 (millions of dollars)
Temporary EquityEquityTotal
Noncontrolling interest - beginning19 44 63 
Net income attributable to noncontrolling interest2 5 7 
Distributions to noncontrolling interest(2)(7)(9)
Noncontrolling interest - ending19 42 61 

Year ended December 31, 2024 (millions of dollars)
Temporary EquityEquityTotal
Noncontrolling interest - beginning20 44 64 
Net income attributable to noncontrolling interest2 5 7 
Distributions to noncontrolling interest(3)(5)(8)
Noncontrolling interest - ending19 44 63 
NRLP
On September 18, 2019, Hydro One Networks sold to the Six Nations of the Grand River Development Corporation and, through a trust, to the Mississaugas of the Credit First Nation a 25.0% and 0.1% equity interest in NRLP partnership units, respectively, for total consideration of $12 million, representing the fair value of the equity interest acquired. On January 31, 2020, the Mississaugas of the Credit First Nation purchased an additional 19.9% equity interest in NRLP partnership units from Hydro One Networks for total cash consideration of $9 million. Following this transaction, Hydro One’s interest in the equity portion of NRLP partnership units was reduced to 55%, with the Six Nations of the Grand River Development Corporation and the Mississaugas of the Credit First Nation owning 25% and 20%, respectively, of the equity interest in NRLP partnership units. The First Nations Partners' noncontrolling interest in NRLP is classified within equity.
The following table shows the movements in NRLP noncontrolling interest during the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024
Noncontrolling interest - beginning21 21 
Net income attributable to noncontrolling interest2 2 
Distributions to noncontrolling interest(3)(2)
Noncontrolling interest - ending20 21 
CLLP
On December 17, 2024, transmission assets totalling $203 million were transferred from Hydro One Networks to CLLP. Effective June 1, 2025, Hydro One Networks sold 10% equity interest to Deshkan Ziibiing Chippewas of the Thames First Nation for cash consideration of $8 million. Effective July 1, 2025, Hydro One Networks sold an additional 10% equity interest to Southwest Indigenous Transmission Limited Partnership, owned by the Caldwell First Nation, for cash consideration of $8 million. The total consideration of $16 million represents the fair value of the equity interest acquired. Following these transactions, Hydro One’s interest in the equity portion of CLLP partnership units was reduced to 80%. The First Nations Partners' noncontrolling interest in CLLP is classified within equity.
The following table shows the movements in CLLP noncontrolling interest during the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024
Noncontrolling interest - beginning— — 
Contributions from sale of noncontrolling interest 16 — 
Net income attributable to noncontrolling interest1 — 
Noncontrolling interest - ending17 — 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




27.    RELATED PARTY TRANSACTIONS
The Province is a shareholder of Hydro One with approximately 47.1% (2024 - 47.1%) ownership as at December 31, 2025. The Ministry of Energy and Mines (Ministry) and the Ministry of Infrastructure (MOI) are related parties to Hydro One because they are controlled by the Province. The IESO, Ontario Power Generation Inc. (OPG), Ontario Electricity Financial Corporation (OEFC), and the OEB are related parties to Hydro One because they are controlled or significantly influenced by the Ministry. Hydro One also has transactions in the normal course of business with various government ministries and organizations in Ontario that fall under the purview of the Province. The following is a summary of the Company’s related party transactions during the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
Related PartyTransaction20252024
ProvinceDividends paid370 350 
Ministry
Broadband subsidy1
27 — 
MOI
Broadband subsidy1
19 43 
IESOPower purchased3,011 2,686 
Revenues for transmission services2,388 2,252 
Amounts related to electricity rebates1,110 1,170 
Distribution revenues related to rural rate protection256 255 
Distribution revenues related to Wataynikaneyap Power LP133 119 
Distribution revenues related to supply of electricity to remote northern communities50 48 
Funding received related to Conservation and Demand Management programs— 1 
OPGPower purchased23 18 
Transmission revenues related to provision of services and supply of electricity2 2 
Distribution revenues related to provision of services and supply of electricity8 5 
Other revenues related to provision of services and supply of electricity2 1 
Capital contribution received from OPG20 3 
Costs related to the purchase of services2 1 
OEFCPower purchased from power contracts administered by the OEFC2 1 
OEBOEB fees14 12 
1 On October 31, 2024, the MOI announced that it has developed a program to deliver up to $400 million in subsidies to internet service providers (ISPs) for work associated with designated broadband projects. The program is intended to enable ISPs to successfully and safely attach their material and equipment to the Company’s poles to bring connectivity to rural communities as part of a designated broadband project as defined under Building Broadband Faster Act (Ontario). A portion of these subsidies is used to reimburse Hydro One Networks on behalf of ISPs for their share of enablement costs incurred to facilitate the program to date. During 2025, Ministry replaced MOI in making broadband subsidy payments to Hydro One.
Sales to and purchases from related parties are based on the requirements of the OEB’s Affiliate Relationships Code. Outstanding balances as at period end are interest-free and settled in cash. Invoices are issued monthly, and amounts are due and paid on a monthly basis.
28.    CONSOLIDATED STATEMENTS OF CASH FLOWS
The changes in non-cash balances related to operations consist of the following:
Year ended December 31 (millions of dollars)
20252024
Accounts receivable
(169)(81)
Due from related parties(84)(12)
Materials and supplies(1)6 
Prepaid expenses and other assets (Note 8)
2 (26)
Other long-term assets(5)(34)
Accounts payable (Note 13)
23 7 
Accrued liabilities 95 136 
Unearned revenue (Note 13)
(23)125 
Due to related parties137 40 
Accrued interest (Note 13)
23 31 
Long-term accounts payable and other long-term liabilities (9)8 
Post-retirement and post-employment benefit liability64 49 
53 249 

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




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 years ended December 31, 2025 and 2024. The reconciling items include net change in accruals, transfers, and capitalized depreciation.
Year ended December 31, 2025 (millions of dollars)
Property, Plant and Equipment
Intangible Assets

Total
Capital investments(3,289)(77)(3,366)
Reconciling items319 (3)316 
Cash outflow for capital expenditures(2,970)(80)(3,050)
Year ended December 31, 2024 (millions of dollars)
Property, Plant and Equipment
Intangible Assets

Total
Capital investments(2,968)(95)(3,063)
Reconciling items248 7 255 
Cash outflow for capital expenditures(2,720)(88)(2,808)
Capital Contributions
Hydro One enters into contracts governed by the OEB Transmission System Code when a transmission customer requests a new or upgraded transmission connection. The customer is required to make a capital contribution to Hydro One based on the shortfall between the present value of the costs of the connection facility and the present value of revenues. The present value of revenues is based on an estimate of load forecast for the period of the contract with Hydro One. Once the connection facility is commissioned, in accordance with the OEB Transmission System Code, Hydro One will periodically reassess the estimated load forecast which will lead to a decrease, or an increase in the capital contributions from the customer. The increase or decrease in capital contributions is recorded directly to property, plant and equipment in service. In 2025, there were $3 million capital contributions from these assessments (2024 - $2 million).
Supplementary Information
Year ended December 31 (millions of dollars)
20252024
Net interest paid724 643 
Income taxes paid45 35 
29.    CONTINGENCIES
Legal Proceedings
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.
Transfer of Assets
The transfer orders by which the Company acquired certain of Ontario Hydro’s businesses as of April 1, 1999 did not transfer title to some assets located on Reserves (as defined in the Indian Act (Canada)). Currently, the OEFC holds these assets. Under the terms of the transfer orders, the Company is required to manage these assets until it has obtained all consents necessary to complete the transfer of title of these assets to itself. The Company cannot predict the aggregate amount that it may have to pay, either on an annual or one-time basis, to obtain the required consents. In 2025, the Company paid $3 million (2024 - $2 million) in respect of consents obtained for a permit that was issued in favour of the Company which would allow for the transfer of assets. In 2025, the Company recorded $6 million (2024 - $4 million) in respect of annual obligations under existing agreements, which includes assets that continued to be held by OEFC. If the Company cannot obtain the required consents, the OEFC will continue to hold these assets for an indefinite period of time. If the Company cannot reach a satisfactory settlement, it may have to relocate these assets to other locations at a cost that could be substantial or, in a limited number of cases, to abandon a line and replace it with diesel-generation facilities. The costs relating to these assets could have a material adverse effect on the Company’s results of operations if the Company is not able to recover them in future rate orders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




30.    COMMITMENTS
A summary of Hydro One’s commitments under outsourcing and other agreements due in the next five years and thereafter are as follows:
As at December 31, 2025 (millions of dollars)
Year 1Year 2Year 3Year 4Year 5Thereafter
Outsourcing and other agreements48 47 33 1 1 17 
Outsourcing and Other Agreements
On July 31, 2025 Hydro One renewed the agreement for information technology services with Capgemini Canada Inc., with a three year term ending July 31, 2028, and includes an option to extend for two additional one-year terms.
Other Commitments
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 December 31, 2025 (millions of dollars)
Year 1Year 2Year 3Year 4Year 5Thereafter
Operating Credit Facilities1
— — — — 3,300 — 
Letters of credit2
191 — — — — — 
Guarantees3
540 — — — — — 
1 On June 1, 2025, the maturity date for the Operating Credit Facilities was extended to June 1, 2030.
2 Letters of credit consist of $166 million letters of credit related to retirement compensation arrangements, an $18 million letter of credit provided to the IESO for prudential support, and $7 million in letters of credit for various operating purposes.
3 Guarantees consist of $475 million prudential support provided to the IESO by Hydro One Inc. on behalf of its subsidiaries, as well as $60 million of guarantees provided by Hydro One to ONroute relating to OCN LP (OCN Guarantee) and $5 million relating to Aux Energy Inc.
Retirement Compensation Arrangements
Bank letters of credit have been issued to provide security for Hydro One Inc.’s liability under the terms of a trust fund established pursuant to the supplementary pension plan for eligible employees of Hydro One Inc. The supplementary pension plan trustee is required to draw upon these letters of credit if Hydro One Inc. is in default of its obligations under the terms of this plan. Such obligations include the requirement to provide the trustee with an annual actuarial report as well as letters of credit sufficient to secure Hydro One Inc.’s liability under the plan, to pay benefits payable under the plan and to pay the letter of credit fee. The maximum potential payment is the face value of the letters of credit.
Prudential Support
Purchasers of electricity in Ontario, through the IESO, are required to provide security to mitigate the risk of their default based on their expected activity in the market. The IESO could draw on these guarantees and/or letters of credit if these purchasers fail to make a payment required by a default notice issued by the IESO. The maximum potential payment is the face value of any letters of credit plus the amount of the parental guarantees.

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HYDRO ONE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the years ended December 31, 2025 and 2024




31.    SEGMENTED REPORTING
The Company has three reportable segments: Transmission, Distribution, and Other. The composition of these segments is described in Note 1 to the consolidated financial statements.
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 (CODM) in deciding how to allocate resources and evaluate the performance of each of the segments. Hydro One’s CODM consists of its Chief Executive Officer and certain members of the executive leadership team. The CODM evaluates segment performance based on income before financing charges, equity income, and income tax expense from continuing operations (excluding certain allocated corporate governance costs) (EBIT). The CODM considers the key components of EBIT to understand the variances to prior period on a quarterly basis and measures them against the Company’s budget and forecast across each of the three segments on a monthly basis in order to properly allocate resources between and within the operating segments.
Year ended December 31, 2025 (millions of dollars)
TransmissionDistributionOtherConsolidated
Revenues2,429 6,557 55 9,041 
Purchased power— 4,486 — 4,486 
Operation, maintenance and administration447 661 98 1,206 
Depreciation, amortization and asset removal costs570 529 12 1,111 
Income (loss) before financing charges, equity income and income tax expense1,412 881 (55)2,238 
Capital investments2,097 1,252 17 3,366 
Year ended December 31, 2024 (millions of dollars)
TransmissionDistributionOtherConsolidated
Revenues2,269 6,175 40 8,484 
Purchased power— 4,143 — 4,143 
Operation, maintenance and administration475 721 112 1,308 
Depreciation, amortization and asset removal costs554 502 10 1,066 
Income (loss) before financing charges, equity income and income tax expense1,240 809 (82)1,967 
Capital investments1,860 1,185 18 3,063 
Total Assets by Segment:
As at December 31 (millions of dollars)
20252024
Transmission23,630 21,630 
Distribution15,160 14,040 
Other881 1,012 
Total assets39,671 36,682 
Total Goodwill by Segment:
As at December 31 (millions of dollars)
20252024
Transmission157 157 
Distribution216 216 
Other5 — 
Total goodwill378 373 
All revenues, assets and substantially all costs, as the case may be, are earned, held or incurred in Canada.
32.    SUBSEQUENT EVENTS
Dividends
On February 12, 2026, common share dividends of $200 million ($0.3331 per common share) were declared.
CLLP
On January 2, 2026, Hydro One Networks sold to Walpole Island First Nation an approximate 10% equity interest in CLLP for total consideration of approximately $8 million. Following the completion of the transaction, Hydro One Networks’ equity interest in CLLP was reduced to 70%. On February 2, 2026, Aamjiwnaang First Nation and Chippewas of Kettle & Stony Point First Nation collectively purchased an approximate 20% equity interest in CLLP through an equally-owned Limited Partnership for total consideration of approximately $16 million. Following the completion of the transaction, Hydro One Networks’ equity interest in CLLP was reduced to 50%.

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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the years ended December 31, 2025 and 2024


The following Management’s Discussion and Analysis (MD&A) of the financial condition and results of operations should be read together with the consolidated financial statements and accompanying notes thereto of Hydro One Limited (Hydro One or the Company) for the year ended December 31, 2025 (together, the Consolidated Financial Statements). The Consolidated Financial Statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP).
The Company has prepared this MD&A in accordance with National Instrument 51-102 - Continuous Disclosure Obligations of the Canadian Securities Administrators. Under the U.S./Canada Multijurisdictional Disclosure System, the Company is permitted to prepare this MD&A in accordance with the disclosure requirements of Canadian securities laws and regulations, which can vary from those of the U.S. This MD&A provides information as at and for the year ended December 31, 2025, based on information available to management as of February 12, 2026.
Included in this MD&A are certain specified financial measures and financial ratios that are not recognized by U.S. GAAP but that are used by management to evaluate the performance of the Company and its businesses. Since these specified financial measures and financial ratios may not have a standardized meaning within U.S. GAAP, results may not be comparable to similar financial measures and financial ratios presented by other entities. These measures and ratios should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under U.S. GAAP. See "Non-GAAP Financial Measures" for a discussion of these non-GAAP financial measures and a reconciliation of such measures to the most directly comparable U.S. GAAP measure.
All financial information in this MD&A is presented in Canadian dollars, unless otherwise indicated.
CONSOLIDATED FINANCIAL HIGHLIGHTS AND STATISTICS
Year ended December 31 (millions of dollars, except as otherwise noted)
20252024Change
Revenues9,0418,4846.6%
Purchased power4,4864,1438.3%
Revenues, net of purchased power1
4,5554,3414.9%
Operation, maintenance and administration (OM&A) costs1,2061,308(7.8%)
Depreciation, amortization and asset removal costs1,1111,0664.2%
Financing charges6796219.3%
Income tax expense21918121.0%
Net income attributable to common shareholders of Hydro One1,3391,15615.8%
Basic earnings per common share (EPS)$2.23$1.9315.5%
Diluted EPS$2.23$1.9216.1%
Net cash from operating activities2,6952,5346.4%
Funds from operations (FFO)1
2,6302,27515.6%
Annualized FFO to Net Debt1
14.2 %13.4 %0.8%
Capital investments3,3663,0639.9%
Assets placed in-service2,9012,46317.8%
Transmission: Average monthly Ontario 60-minute peak demand (MW)
21,39820,6593.6%
Distribution: Electricity distributed to Hydro One customers (GWh)
33,29431,5235.6%

As at December 31		20252024
Net Debt to capitalization ratio1
59.5 %58.4 %
1     See section “Non-GAAP Financial Measures”.
1
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
OVERVIEW
Through its wholly-owned subsidiary Hydro One Inc., Hydro One is Ontario’s largest electricity transmission and distribution utility. Hydro One owns and operates substantially all of Ontario’s electricity transmission network and is the largest electricity distributor in Ontario by number of customers. The Company’s regulated transmission and distribution operations are owned by Hydro One Inc. Hydro One delivers electricity safely and reliably to approximately 1.5 million customers across the province, and to large industrial customers and municipal utilities. Through its subsidiaries, Hydro One Inc. owns and operates approximately 30,000 circuit kilometres of high-voltage transmission lines and approximately 126,000 circuit kilometres of primary low-voltage distribution lines. Hydro One has three segments: (i) transmission; (ii) distribution; and (iii) other.
For the years ended December 31, 2025 and 2024, Hydro One's segments accounted for the Company's total revenues, as follows:
Year ended December 3120252024
Transmission27 %27 %
Distribution72 %72 %
Other1 %1 %
When adjusted for the recovery of purchased power costs, Hydro One’s segments accounted for the Company’s total revenues, net of purchased power,1 for the years ended December 31, 2025 and 2024 as follows:
Year ended December 3120252024
Transmission53 %52 %
Distribution46 %47 %
Other1 %1 %
As at December 31, 2025 and 2024, Hydro One’s segments accounted for the Company’s total assets as follows:
As at December 3120252024
Transmission60 %59 %
Distribution38 %38 %
Other2 %3 %
Transmission Segment
Hydro One’s transmission business consists of owning and operating the Company’s transmission system, which accounts for approximately 91% (2024 - 90%) of Ontario’s transmission capacity based on the network component of the revenue requirement2 approved by the Ontario Energy Board (OEB).3 As at December 31, 2025, the Company's transmission business consists of the transmission system operated by Hydro One Inc.'s rate-regulated subsidiaries, Hydro One Networks Inc. (Hydro One Networks), Hydro One Sault Ste. Marie LP (HOSSM), and an approximate 80% (2024 - 100%) interest in Chatham x Lakeshore Limited Partnership (CLLP), an approximate 66% interest in B2M Limited Partnership (B2M LP) and an approximate 55% interest in Niagara Reinforcement Limited Partnership (NRLP). The Company’s approximately 80% interest in CLLP was reduced to approximately 70% in January 2026 and 50% in February 2026. The transmission segment also includes Hydro One Networks’ approximate 48% minority interest in the East-West Tie Limited Partnership (EWT LP) (see section “Other Developments - EWT LP”). The Company’s transmission business is rate-regulated and earns revenues mainly by charging transmission rates that are approved by the OEB.
For the year ended December 3120252024
Electricity transmitted1 (MWh)
145,587,496 140,417,171 
Rate base (millions of dollars)
17,256 16,335 
Capital investments (millions of dollars)
2,097 1,860 
Assets placed in-service (millions of dollars)
1,543 1,431 
1 Electricity transmitted represents total electricity transmitted in Ontario by all transmitters.
As at December 3120252024
Transmission lines spanning the province (circuit-kilometres)
30,479 29,935 

1 See section “Non-GAAP Financial Measures”.
2 The network component of the revenue requirement is Hydro One’s portion of the transmission revenue requirement attributed to assets that are used for the common benefit of all Hydro One and non-Hydro One customers in the province.
3 Hydro One owns and operates approximately 94% of the transmission system in Ontario based on the total OEB approved revenue requirement.
2
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Distribution Segment
Hydro One’s distribution business is the largest in Ontario and consists of the distribution systems operated by Hydro One Inc.'s rate-regulated subsidiaries, Hydro One Networks and Hydro One Remote Communities Inc. (Hydro One Remotes). The Company’s distribution business earns revenues mainly by charging distribution rates that are approved by the OEB, as well as amounts to recover the cost of purchased power.
For the year ended December 3120252024
Electricity distributed to Hydro One customers (GWh)
33,294 31,523 
Electricity distributed through Hydro One lines (GWh)1
43,283 41,445 
Rate base (millions of dollars)
10,788 10,184 
Capital investments (millions of dollars)
1,252 1,185 
Assets placed in-service (millions of dollars)
1,338 1,017 
1 Units distributed through Hydro One lines represent total distribution system requirements and include electricity distributed to consumers who purchased power directly from the Independent Electricity System Operator (IESO).
As at December 3120252024
Distribution lines spanning the province (circuit-kilometres)
126,179 125,533 
Distribution customers (number of customers)
1,520,883 1,514,690 
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Other Segment
Hydro One's other segment consists principally of its telecommunications business, which provides telecommunications support for the Company’s transmission and distribution businesses, as well as certain corporate activities.
The telecommunication business is carried out by Hydro One's wholly-owned subsidiary, Acronym Solutions Inc. (Acronym). In addition to supporting Hydro One's regulated business segments, Acronym offers a comprehensive suite of Information and Communications Technology solutions within a number of categories (including: Internet & Network, Security, Voice & Collaboration, Cloud and Managed Information Technology (IT)) that extend beyond its fibre optic network, in a competitive commercial market. Acronym is not regulated by the OEB, however Acronym is registered with the Canadian Radio-television and Telecommunications Commission as a non-dominant, facilities-based carrier, providing broadband telecommunications services in Ontario with connections to Montreal, Quebec; Buffalo, New York; and Detroit, Michigan.
Hydro One's other segment also includes the deferred tax asset (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 the Company’s initial public offering in 2015. As the DTA is not required to be shared with ratepayers, the Company considers it to not be part of the regulated transmission and distribution segment assets, and it is included in the other segment. Furthermore, Hydro One's other segment also includes Aux Energy Inc., a wholly-owned subsidiary that provides energy solutions to commercial and industrial clients, and Ontario Charging Network LP, a wholly-owned subsidiary (2024 - a joint venture) that owns and operates electric vehicle fast charging stations across Ontario under the Ivy Charging Network brand, as well as certain corporate activities, and is not rate-regulated.

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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
PRIMARY FACTORS AFFECTING RESULTS OF OPERATIONS
Transmission Revenues
Transmission revenues primarily consist of regulated transmission rates approved by the OEB which are charged based on the monthly peak electricity demand across Hydro One’s high-voltage network. Transmission rates are designed to generate revenues necessary to construct, upgrade, extend and support a transmission system with sufficient capacity to accommodate maximum forecasted demand and a regulated return on the Company’s investment. Peak electricity demand is primarily influenced by weather and economic conditions. Transmission revenues also include export revenues associated with transmitting electricity to markets outside of Ontario as well as ancillary revenues associated with providing maintenance services to power generators and from third-party land use.
Distribution Revenues
Distribution revenues primarily consist of regulated distribution rates approved by the OEB, as well as the recovery of purchased power costs. Distribution rates are designed to generate revenues necessary to construct and support the local distribution system with sufficient capacity to accommodate existing and new customer demand and a regulated return on the Company’s investment. Accordingly, distribution revenues are influenced by distribution rates, the cost of purchased power, and the amount of electricity the Company distributes. Distribution revenues also include ancillary distribution service revenues, such as fees related to the joint use of Hydro One’s distribution poles by the telecommunications and cable television industries, as well as miscellaneous revenues such as charges for late payments.
Purchased Power Costs
Purchased power costs are incurred by the distribution business and represent the cost of the electricity purchased by the Company for delivery to customers within Hydro One’s distribution service territory. These costs are comprised of: (i) the wholesale commodity cost of energy; (ii) the Global Adjustment, which is the difference between the guaranteed price and the money the generators earn in the wholesale marketplace; and (iii) the wholesale market service and transmission charges levied by the IESO. Hydro One passes on the cost of electricity that it delivers to its customers, and is therefore not exposed to wholesale electricity commodity price risk.
OM&A
OM&A costs are incurred to support the operation and maintenance of the transmission and distribution systems, and include other costs such as property taxes related to transmission and distribution stations and buildings, and the operation of IT systems. Transmission OM&A costs are required to sustain the Company’s high-voltage transmission stations, lines, and rights-of-way, and include preventive and corrective maintenance costs related to power equipment, overhead transmission lines, transmission station sites, and forestry control to maintain safe distances between line spans and trees. Distribution OM&A costs are required to maintain the Company’s low-voltage distribution system to provide safe and reliable electricity to the Company's residential, small business, commercial, and industrial customers across the province. These include costs related to distribution line clearing and forestry control to reduce power outages caused by trees, line maintenance and repair, land assessment and remediation, as well as issuing timely and accurate bills and responding to customer inquiries.
Hydro One manages its costs through ongoing efficiency and productivity initiatives, while continuing to complete planned work programs associated with the development and maintenance of its transmission and distribution networks.
Depreciation, Amortization and Asset Removal Costs
Depreciation and amortization costs relate primarily to the depreciation of the Company’s property, plant and equipment, and amortization of certain intangible assets and regulatory assets. Asset removal costs consist of costs incurred to remove property, plant and equipment where no asset retirement obligations have been recorded on the balance sheet.
Financing Charges
Financing charges relate to the Company’s financing activities and include interest expense on the Company’s long-term debt and short-term borrowings, as well as gains and losses on interest rate swap agreements, foreign exchange or other similar contracts, net of interest earned on short-term investments. A portion of financing charges incurred by the Company is capitalized to the cost of property, plant and equipment associated with the periods during which such assets are under construction before being placed in-service.

4
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
RESULTS OF OPERATIONS
Net Income
Net income attributable to common shareholders of Hydro One for the year ended December 31, 2025 of $1,339 million is $183 million, or 15.8%, higher than the prior year. Significant influences on the change in net income attributable to common shareholders of Hydro One included:
•higher revenues, net of purchased power,4 resulting from an increase in transmission and distribution revenues due to OEB-approved 2025 rates, as well as higher average monthly peak demand and energy consumption, partially offset by regulatory adjustments including higher earnings sharing in the current period; and
•lower OM&A costs primarily resulting from lower work program expenditures and lower corporate support costs; partially offset by
•higher depreciation, amortization and asset removal costs primarily due to the growth in capital assets as the Company continues to place new assets in-service;
•higher financing charges primarily due to an increase in outstanding long-term debt, partially offset by higher capitalized interest; and
•higher income tax expense, primarily resulting from higher pre-tax earnings, partially offset by higher deductible timing differences.
EPS
EPS was $2.23 for the year ended December 31, 2025, compared to EPS of $1.93 in 2024. The 15.5% increase in EPS was primarily driven by higher earnings year-over-year, as discussed above.
Revenues
Year ended December 31 (millions of dollars, except as otherwise noted)
20252024Change
Transmission2,429 2,269 7.1%
Distribution6,557 6,175 6.2%
Other55 40 37.5%
Total revenues9,041 8,484 6.6%
Transmission2,429 2,269 7.1%
Distribution revenues, net of purchased power1
2,071 2,032 1.9%
Other55 40 37.5%
Total revenues, net of purchased power1
4,555 4,341 4.9%
Transmission: Average monthly Ontario 60-minute peak demand (MW)
21,398 20,659 3.6%
Distribution: Electricity distributed to Hydro One customers (GWh)
33,294 31,523 5.6%
1 See section “Non-GAAP Financial Measures”.
Transmission Revenues
Transmission revenues increased by 7.1% compared to the year ended December 31, 2024, primarily due to:
•higher average monthly peak demand;
•higher revenues resulting from OEB-approved 2025 rates; and
•CLLP revenues following the in servicing of the transmission line in the fourth quarter of 2024; partially offset by
•regulatory adjustments in the period, including a higher earnings sharing accrual.
Distribution Revenues
Distribution revenues increased by 6.2% compared to the year ended December 31, 2024, primarily due to:
•higher purchased power costs, which are fully recovered from ratepayers and thus net income neutral;
•higher revenues resulting from OEB-approved 2025 rates; and
•higher energy consumption; partially offset by
•regulatory adjustments in the period, including a higher earnings sharing accrual; and
•net income neutral items, including lower revenue of Hydro One Remotes, which is offset in OM&A.
Distribution revenues, net of purchased power,4 increased by 1.9% compared to the same period in the prior year largely due to the factors noted above.
4 See section “Non-GAAP Financial Measures”.
5
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
OM&A Costs
Year ended December 31 (millions of dollars)
20252024Change
Transmission447 475 (5.9%)
Distribution661 721 (8.3%)
Other98 112 (12.5%)
1,206 1,308 (7.8%)
Transmission OM&A Costs
Transmission OM&A costs were 5.9% lower than the year ended December 31, 2024, primarily due to:
•severance costs in the prior year;
•lower work program expenditures, including vegetation management and lines maintenance; and
•lower corporate support costs; partially offset by
•higher property taxes; and
•higher asset write-offs.
Distribution OM&A Costs
Distribution OM&A costs were 8.3% lower than the year ended December 31, 2024, primarily due to:
•severance costs in the prior year;
•lower work program expenditures, including environmental and vegetation management;
•lower fuel costs of Hydro One Remotes, which are fully recovered through revenue and therefore net income neutral; and
•lower bad debt expense; partially offset by
•higher asset write-offs.
Other OM&A Costs
Other OM&A costs were 12.5% lower than the year ended December 31, 2024, including lower costs in Acronym primarily due to higher third party service costs in the prior year.
Depreciation, Amortization and Asset Removal Costs
Depreciation, amortization and asset removal costs increased by $45 million, or 4.2%, for the year ended December 31, 2025. This increase was primarily due to growth in capital assets as the Company continues to place new assets in-service, consistent with its ongoing capital investment program.
Financing Charges
Financing charges increased by $58 million, or 9.3%, for the year ended December 31, 2025, primarily due to an increase in outstanding long-term debt, partially offset by higher capitalized interest.
Income Tax Expense
Income taxes are accounted for using the asset and liability method. Current income taxes are recorded based on the income taxes expected to be paid in respect of the current and prior years’ taxable income. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts and the respective tax basis of assets and liabilities including carryforward unused tax losses and credits.
As prescribed by the regulators, the Company recovers income taxes in revenues from ratepayers based on an estimate of current income tax expense in respect of regulated operations. The amounts of deferred income taxes related to regulated operations, which are considered to be more likely-than-not of recovery from, or refund to, ratepayers in future periods are recognized as deferred income tax regulatory assets or liabilities, with an offset to deferred income tax expense. Therefore, the consolidated income tax expense or recovery for the current period is based on the total current and deferred income tax expense or recovery, net of the regulatory accounting offset to deferred income tax expense arising from temporary differences recoverable from or refundable to customers in the future.
Income tax expense was $219 million for the year ended December 31, 2025, compared to $181 million in 2024. The $38 million increase in income tax expense for the year ended December 31, 2025 was primarily attributable to:
•higher pre-tax earnings, partially offset by
•higher deductible timing differences compared to the prior year.
The Company realized an effective tax rate (ETR) of approximately 14.0% for the year ended December 31, 2025 compared to approximately 13.4% realized in 2024. The increase of 0.6% was primarily attributable to the factors noted above.
6
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
SHARE CAPITAL
The common shares of Hydro One are publicly traded on the Toronto Stock Exchange (TSX) under the trading symbol "H". Hydro One is authorized to issue an unlimited number of common shares. The amount and timing of any dividends payable by Hydro One is at the discretion of Hydro One's Board of Directors (Board) and is established on the basis of Hydro One’s results of operations, maintenance of its deemed regulatory capital structure, the Company’s financial condition and forecast cash requirements, the satisfaction of solvency tests imposed by corporate laws for the declaration and payment of dividends, and other factors that the Board may consider relevant. As at February 12, 2026, Hydro One had 599,781,811 issued and outstanding common shares.
The Company is authorized to issue an unlimited number of preferred shares, issuable in series. As at February 12, 2026, the Company had no preferred shares issued and outstanding.
The number of additional common shares of Hydro One that would be issued if all outstanding awards under the share grant plans and the Long-term Incentive Plan (LTIP) were vested and exercised as at February 12, 2026 was 1,424,325.
Common Share Dividends
In 2025, the Company declared and paid cash dividends to common shareholders as follows:

Date Declared
Record Date
Payment Date
Amount per Share
Total Amount
(millions of dollars)
February 19, 2025March 12, 2025March 31, 2025$0.3142 188
May 7, 2025June 11, 2025June 30, 2025$0.3331 200 
August 12, 2025September 10, 2025September 29, 2025$0.3331 200 
November 12, 2025December 10, 2025December 31, 2025$0.3331 200 
788
Following the conclusion of the fourth quarter of 2025, the Company declared a cash dividend to common shareholders as follows:

Date Declared
Record Date
Payment Date
Amount per Share
Total Amount
(millions of dollars)
February 12, 2026March 11, 2026March 31, 2026$0.3331 $200 
SELECTED ANNUAL FINANCIAL STATISTICS
Year ended December 31 (millions of dollars, except per share amounts)
202520242023
Revenues9,041 8,484 7,844 
Net income attributable to common shareholders of Hydro One1,339 1,156 1,085 
Basic EPS$2.23$1.93$1.81
Diluted EPS$2.23$1.92$1.81
Dividends per common share declared$1.31$1.24$1.17
As at December 31 (millions of dollars)
202520242023
Total assets39,671 36,682 32,852 
Total non-current financial liabilities1
18,138 16,393 14,750 
1 Total non-current financial liabilities include long-term debt, long-term lease obligations, derivative liabilities, and long-term accounts payable and accruals.
Net Income - 2024 compared to 2023
Net income attributable to common shareholders of Hydro One for the year ended December 31, 2024 of $1,156 million was $71 million, or 6.5%, higher than the prior year. Significant influences on the change in net income attributable to common shareholders included:
•higher revenues, net of purchased power,5 resulting from an increase in transmission and distribution revenues due to OEB-approved 2024 rates, differences in regulatory adjustments recorded in each respective period, and higher energy consumption; and
•lower OM&A costs primarily resulting from lower work program expenditures; partially offset by    
•higher depreciation, amortization and asset removal costs primarily due to the growth in capital assets as the Company continues to place new assets in-service;
•higher financing charges primarily due to higher interest on long-term debt as well as higher long-term debt, partially offset by a lower average volume of short-term notes outstanding and a higher capitalized interest; and
•higher income tax expense, adjusted for net income neutral items, primarily due to lower deductible timing differences higher pre-tax earnings.
5 See section "Non-GAAP Financial Measures"
7
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
While net income neutral, year-to-date results were also impacted by the cessation of the OEB-approved recovery of DTA amounts previously shared with ratepayers (DTA Recovery Amounts) on June 30, 2023, which resulted in a decrease in revenue, net of purchased power6 in 2024 that has been offset by lower income tax expense.
EPS - 2024 compared to 2023
EPS was $1.93 for the year ended December 31, 2024, compared to EPS of $1.81 in 2023. The increase in EPS was primarily driven by the impact of higher earnings year-over-year, as discussed above.
QUARTERLY RESULTS OF OPERATIONS
Quarter ended (millions of dollars, except EPS and ratio)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Revenues2,268 2,299 2,066 2,408 2,095 2,192 2,031 2,166 
Purchased power1,287 1,080 899 1,220 1,060 1,047 940 1,096 
Revenues, net of purchased power1
981 1,219 1,167 1,188 1,035 1,145 1,091 1,070 
Net income attributable to common shareholders233 421 327 358 200 371 292 293 
Basic EPS$0.39 $0.70 $0.54 $0.60 $0.33 $0.62 $0.49 $0.49 
Diluted EPS$0.39 $0.70 $0.54 $0.60 $0.33 $0.62 $0.49 $0.49 
Earnings coverage ratio1
2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 
1    See section “Non-GAAP Financial Measures”.
Variations in revenues and net income attributable to common shareholders over the quarters are primarily due to the impact of seasonal weather conditions on customer demand and market pricing, as well as timing of regulatory decisions.
CAPITAL INVESTMENTS
The Company makes capital investments to maintain the safety, reliability and integrity of its transmission and distribution system assets and to provide for the ongoing growth and modernization required to meet the expanding and evolving needs of its customers and the electricity market. This is achieved through a combination of sustaining capital investments, which are required to support the continued operation of Hydro One’s existing assets, and development capital investments, which involve additions to both existing assets and large-scale projects such as new transmission lines and transmission stations.
Assets Placed In-Service
The following table presents Hydro One’s assets placed in-service during the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024Change
Transmission1,543 1,431 7.8%
Distribution1,338 1,017 31.6%
Other20 15 33.3%
Total assets placed in-service2,901 2,463 17.8%
Transmission Assets Placed In-Service
Transmission assets placed in-service increased by $112 million, or 7.8%, during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to:
•timing of assets placed in-service for station refurbishments and replacements, including the Bruce A Transmission Station;
•investments placed in-service in Sault Ste. Marie for the Sault #3 Circuit;
•investments placed in-service for customer connection projects; and
•investments placed in-service at the Orillia Distribution Warehouse; partially offset by
•investments placed in-service for the Chatham to Lakeshore Transmission Line;
•lower volume of line refurbishments and wood pole replacements; and
•investment placed in-service for the Network Management System.
6 See section "Non-GAAP Financial Measures"
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Distribution Assets Placed In-Service
Distribution assets placed in-service increased by $321 million, or 31.6%, during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to:
•higher volume of storm-related asset replacements;
•assets placed in-service for the Advanced Metering Infrastructure (AMI) 2.0 system;
•investments placed in-service for the Orillia Distribution Warehouse and the Orillia Operation Centre;
•investments placed in-service for Ontario’s broadband initiative; and
•timing of assets placed in-service for system capability reinforcement projects; partially offset by
•lower volume of wood pole replacements and line refurbishments;
•timing of investments placed in-service for IT initiatives; and
•assets placed in-service for the Orleans Operation Centre in the prior year.
Capital Investments
The following table presents Hydro One’s capital investments during the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
20252024Change
Transmission
    Sustaining1,146 1,284 (10.7%)
    Development864 467 85.0%
    Other87 109 (20.2%)
2,097 1,860 12.7%
Distribution
    Sustaining688 561 22.6%
    Development463 513 (9.7%)
    Other101 111 (9.0%)
1,252 1,185 5.7%
Other17 18 (5.6%)
Total capital investments3,366 3,063 9.9%
Total 2025 capital investments of $3,366 million for the year ended December 31, 2025, were $176 million lower than the previously disclosed expected amount of $3,542 million, primarily due to timing and project schedule shifts of capital investments for transmission station refurbishments and equipment replacements.
Transmission Capital Investments
Transmission capital investments increased by $237 million, or 12.7%, during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to:
•investments in the Waasigan Transmission Line Project;
•investments in the St. Clair Transmission Line Project; and
•higher spend on customer connections; partially offset by
•lower volume of station refurbishments and equipment replacements;
•lower volume of line refurbishments and wood pole replacements; and
•investments in the Orillia Distribution Warehouse.
Distribution Capital Investments
Distribution capital investments increased by $67 million, or 5.7%, in the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to:
•higher spend on storm-related asset replacements;
•investments in Ontario’s broadband initiative; and
•investments in the AMI 2.0 system; partially offset by
•lower volume of wood pole replacements;
•lower spend on system capability reinforcement projects;
•investments in the Orillia Distribution Warehouse, Orillia Operation Centre and Orleans Operation Centre;
•lower spend on IT initiatives;
•lower volume of work on customer connections; and
•lower volume of polychlorinated biphenyl (PCB) transformer replacements.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Major Transmission Capital Investment Projects
The following table summarizes the status of significant transmission projects as at December 31, 2025:

Project Name
Location
Type		Anticipated
In-Service Date
Estimated
Cost1
Capital Cost
To Date
(year)               (millions of dollars)
Development Projects:
   Centennial Transmission Station2
Southwestern OntarioNew transmission station and
  connection		2026229185
   Waasigan Transmission Line3
Thunder Bay-Atikokan-Dryden
  Northwestern Ontario		New transmission line and
  station expansion		20271,200539
   Holt Transmission StationBowmanville Central OntarioNew transmission station and
  connection		202713728
   St. Clair Transmission Line4
Southwestern OntarioNew transmission line and
  station expansion		2027472247
   Keith Intertie UpgradeWindsor
   Southwestern Ontario		Transmission station upgrade20281099
   Welland Thorold Power Line5
Niagara
   Southern Ontario		New transmission line and
  station expansion		202931120
   Longwood to Lakeshore
Transmission Line6
Southwestern OntarioNew transmission line and
  station expansion		TBDTBD46
   Durham Kawartha Power Line7,8
Eastern OntarioNew transmission line and
  station expansion		TBDTBD24
   Northeast Power Line7,8
Northeastern OntarioNew transmission line and
  station expansion		TBDTBD23
   North Shore Link7,8
Northeastern OntarioNew transmission line and
  station expansion		TBDTBD20
   Wawa Timmins Power Line7,8
Northeastern OntarioNew transmission line and
  station expansion		TBDTBD8
   Second Longwood to Lakeshore
Transmission Line6
Southwestern OntarioNew transmission line and
  station expansion		TBDTBD2
   Windsor to Lakeshore
     Transmission Line6
Southwestern OntarioNew transmission line and
  station expansion		TBDTBD2
  Bowmanville to Parkway
     Transmission Line9
Southern OntarioNew transmission line and
  station expansion		TBDTBD— 
   Wellington to Preston
     Transmission Line10
Southwestern OntarioNew transmission line and new transmission stationTBDTBD— 
   Greenstone Transmission LineNorthwestern OntarioNew transmission line and
  station expansion		TBDTBD— 
   Sudbury to Barrie
    Transmission Line11
Northern-Central OntarioNew transmission line and
  station expansion		TBDTBD— 
Sustainment Projects:
   Middleport Transmission Station
     Circuit Breaker Replacement		Middleport
  Southwestern Ontario		Station sustainment2026184171
   Lennox Transmission Station
     Circuit Breaker Replacement		Napanee
  Southeastern Ontario		Station sustainment2026152152
   Esplanade x Terauley
     Underground Cable Replacement		Toronto
  Southern Ontario		Line sustainment202611796
   Bridgman Transmission Station
     Refurbishment		Toronto
  Southern Ontario		Station sustainment202610893
   Bruce A Transmission Station
     Switchyard Replacement		Tiverton
  Southwestern Ontario		Station sustainment2027555421
   Otto Holden Transmission Station
     Refurbishment		Mattawa
  Northeast Ontario		Station sustainment202812872
   Merivale Transmission Station
     Replacement and Upgrades12
Ottawa
  Eastern Ontario		Station sustainment and
  upgrade		2029271178
   Synchronous Optical Network
     Telecommunication Replacement		OntarioTelecommunication sustainment202913716
    Essa Transmission Station Circuit
      Breaker Replacement		Barrie
  Central Ontario		Station sustainment20301167
1 Estimated costs are presented gross of any potential contribution from external parties.
2 This Project is part of a two-phase project, which includes the construction of a transmission station and a transmission line to meet the needs of, and is anticipated to be largely funded by, an industrial customer. Phase 1 of the Centennial Transmission Station Project includes a new transmission station in St. Thomas and an approximately 2 km, 230 kV double-circuit transmission line between the new transmission station and an existing transmission station in the city. This phase of the project is anticipated to be in service by the end of 2026. Scope and timing of the second phase, an approximately 20 km, 230 kV double-circuit transmission line from London to St. Thomas, is currently under review.
3 The Waasigan Transmission Line Project includes construction of new transmission lines as well as station enhancements to support energization of the new lines. The estimated cost relates to the development and construction phases of the project and the anticipated in-service date reflects anticipated completion in 2027. The first phase of the project is anticipated to be in-serviced in 2026.
4 The St. Clair Transmission Line Project includes the line and associated facilities.
5 The IESO has recommended a target in-service date of 2029 for the Welland Thorold Power Line.
6 The capital cost to date relates to costs incurred in the development phase of the project. The scope and timing of these Southwestern Ontario transmission reinforcement projects are currently under review. The IESO has recommended a target in-service date by 2032 for the Windsor to Lakeshore Transmission Line.
7 The capital cost to date relates to costs incurred in the development phase of the project. The scope and timing of these Northeastern and Eastern Ontario transmission reinforcements are currently under review. The Wawa Timmins Power Line was previously referred to as the Wawa to Porcupine Transmission Line.
8 The IESO has recommended a target in-service date of 2030 for the Wawa Timmins Power Line, and of 2029 for the Northeast Power Line, North Shore Link, and the Durham Kawartha Power Line.
9 The Bowmanville to Parkway Transmission Line was previously referred to as the Bowmanville to Greater Toronto Area Transmission Line.
10The IESO has recommended a target in-service date of 2031 for the Wellington to Preston Transmission Line and the Wellington Transmission Station in the Township of Puslinch. (See Section “Other Developments - Wellington to Preston Line Project”)
11Pertains to the First Sudbury to Barrie Transmission Line. The scope and timing of the line is currently under review. The IESO has recommended a target in-service date by 2032.
12 The coordinated project includes both an asset replacement and station expansion. The anticipated in-service dates are between 2026 to 2029.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Future Capital Investments
The Company estimates future capital investments based on management’s expectations of the amount of capital expenditures that will be required to provide transmission and distribution services that are efficient, reliable, and provide value for customers, consistent with the OEB’s Renewed Regulatory Framework. The Company includes projects when there is a high degree of confidence that the project will go forward and when there is a thorough estimate of the expected expenditures.
The forecast below does not include offsets associated with the impact of restoration costs associated with a severe storm that began on March 28, 2025 causing significant damage to system infrastructure and outages to customers in the central and eastern regions of the province, with restoration efforts continuing into the second quarter. On April 29, 2025, the Company notified the OEB that it intended to submit a Z-Factor application to seek recovery of costs incurred for this storm. On August 28, 2025, the Company submitted the Z-Factor application. The application seeks recovery of approximately $225 million in storm-related costs, including capital and asset removal costs. The forecast is expected to be updated pending the outcome of that application. The decision regarding the Z-factor application is anticipated to be issued by the OEB in early 2026.
The following tables summarize Hydro One’s annual projected capital investments for 2026 to 2027 by business segment and by category:
By business segment: (millions of dollars)
20262027
Transmission1
2,116 1,892 
Distribution1,093 918 
Other39 32 
Total capital investments2
3,248 2,842 
By category: (millions of dollars)
20262027
Sustainment1,426 1,064 
Development1
1,657 1,626 
Other3
165 152 
Total capital investments2
3,248 2,842 
1 Figures include investments in certain development projects of Hydro One Networks not included in the investment plan approved by the OEB in the Joint Rate Application (JRAP) decision.
2 Since the first quarter of 2022, the Minister of Energy and Electrification (formerly the Minister of Energy) (Minister) has directed the OEB to amend Hydro One Networks’ transmission licence to require it to develop and seek approvals for eleven priority transmission lines in Ontario. The future capital investments presented do not include capital expenditures, nor development costs, associated with the following three priority Southwestern Ontario transmission line projects: Longwood to Lakeshore Transmission Line, Second Longwood to Lakeshore Transmission Line, and Windsor to Lakeshore Transmission Line; nor the following four priority Northeastern and Eastern Ontario transmission line projects: North Shore Link, Northeast Power Line, Durham Kawartha Power Line, and Wawa Timmins Power Line (see section “Other Developments - Supporting Critical Transmission Infrastructure in Northeastern and Eastern Ontario”); nor the Bowmanville to Parkway, Greenstone and Barrie to Sudbury Transmission Lines (see section “Affordable Energy Act, 2024 and Ontario Integrated Energy Plan”). Hydro One is currently evaluating the scope and timing of these ten lines.
3 “Other” capital expenditures include investments in fleet, real estate, IT, and operations technology and related functions.
SUMMARY OF SOURCES AND USES OF CASH
Hydro One’s primary sources of cash flows are funds generated from operations, capital market debt issuances and bank credit facilities that are used to satisfy Hydro One’s capital resource requirements, including the Company’s capital expenditures, servicing and repayment of debt, and dividend payments.
Year ended December 31 (millions of dollars)
20252024
Net cash from operating activities2,695 2,534 
Net cash from financing activities652 1,233 
Net cash used in investing activities(3,514)(3,130)
Net change in cash and cash equivalents(167)637 
Net cash from operating activities
Net cash from operating activities increased by $161 million for the year ended December 31, 2025 compared to the same period in 2024. The increase was impacted by various factors, including the following:
•higher pre-tax earnings; and
•changes in regulatory account balances; partially offset by
•changes in net working capital deficiency primarily attributable to lower unearned revenue related to capital contributions, timing differences in the settlement of receivables, higher receivables from the IESO driven by a higher Ontario Electricity Rebate, partially offset by higher cost of power payable to the IESO due to higher purchased volumes.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Net cash from financing activities
Net cash from financing activities decreased by $581 million for the year ended December 31, 2025, compared to the same period of 2024. This decrease was impacted by various factors, including the following:
Uses of cash
•the Company repaid $6,170 million of short-term notes in 2025, compared to $2,890 million repaid in 2024.
•the Company repaid $1,150 million of long-term debt in 2025, compared to $700 million repaid in 2024.
•the Company paid common share dividends of $788 million in 2025, compared to dividends of $743 million paid in 2024.
Sources of cash
•the Company received proceeds of $6,070 million from the issuance of short-term notes in 2025, compared to $2,810 million received in 2024.
•the Company issued $2,698 million of long-term debt in 2025, compared to $2,781 million of long-term debt issued in 2024.
Net cash used in investing activities
Net cash used in investing activities for the year ended December 31, 2025 was $384 million higher than the same period of 2024 as a result of the investment in EWT LP (see section “Other Developments - EWT LP”), and higher capital investments. See section “Capital Investments” for comparability of capital investments made by the Company during the year ended December 31, 2025 compared to the prior year.
LIQUIDITY AND FINANCING STRATEGY
Short-term liquidity is provided through FFO,7 Hydro One Inc.’s commercial paper program, and the Company’s consolidated bank credit facilities. Under the commercial paper program, Hydro One Inc. is authorized to issue up to $2,300 million in short-term notes with a term to maturity of up to 365 days.
As at December 31, 2025, Hydro One Inc. had $100 million in commercial paper borrowings outstanding, compared to $200 million outstanding at December 31, 2024. The Company also has committed, unsecured, and revolving credit facilities (Operating Credit Facilities) with a total available balance of $3,300 million as at December 31, 2025. The Operating Credit Facilities include a pricing adjustment which can increase or decrease Hydro One’s cost of borrowing based on its performance on certain sustainability performance measures, which are related to Hydro One's sustainability goals. On June 1, 2025, Hydro One extended the maturity date of the Operating Credit Facilities from 2029 to 2030. No amounts were drawn on the Operating Credit Facilities as at December 31, 2025 or 2024. The Company may use the Operating Credit Facilities for working capital and general corporate purposes. The short-term liquidity under the commercial paper program, the Operating Credit Facilities, available cash on hand and anticipated levels of FFO7 are expected to be sufficient to fund the Company’s operating requirements.
As at December 31, 2025, the Company had long-term debt outstanding in the principal amount of $19,045 million, which included $425 million of long-term debt issued by Hydro One and $18,620 million of long-term debt issued by Hydro One Inc. The majority of long-term debt issued by Hydro One Inc. has been issued under its Medium-Term Note (MTN) Program, as further described below. The Company's total long-term debt consists of notes and debentures that mature between 2026 and 2064, and as at December 31, 2025 had a weighted-average term to maturity of approximately 13.7 years (December 31, 2024 - 13.7 years) and a weighted-average coupon rate of 4.2% (December 31, 2024 - 4.2%).
In February 2024, Hydro One Inc. filed a short form base shelf prospectus in connection with its MTN Program, which expires in March 2026. A new MTN Program prospectus is expected to be filed in the first quarter of 2026.
On August 19, 2024, Hydro One filed a short form base shelf prospectus (Universal Base Shelf Prospectus) with securities regulatory authorities in Canada. The Universal Base Shelf Prospectus allows Hydro One to offer, from time to time in one or more public offerings, debt, equity or other securities, or any combination thereof, during the 25-month period ending in September 2026. As at December 31, 2025, no securities have been issued under the Universal Base Shelf Prospectus.
On November 29, 2024, Hydro One Holdings Limited (HOHL) filed a short form base shelf prospectus (HOHL U.S. Debt Shelf Prospectus) with securities regulatory authorities in Ontario and the U.S., that expires in December 2026. The HOHL U.S. Debt Shelf Prospectus allows HOHL to offer, from time to time in one or more public offerings, debt securities, unconditionally guaranteed by Hydro One. As at December 31, 2025, no securities have been issued under the HOHL U.S. Debt Shelf Prospectus.
7 See section “Non-GAAP Financial Measures”.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
On August 18, 2025, Hydro One Inc. filed a short form base shelf prospectus (HOI U.S. Debt Shelf Prospectus) with securities regulatory authorities in Ontario and the U.S. The HOI U.S. Debt Shelf Prospectus allows Hydro One Inc. to offer, from time to time in one or more public offerings, U.S. debt securities, during the 25-month period ending on September 18, 2027. As at December 31, 2025, no securities have been issued under the HOI U.S. Debt Shelf Prospectus.
Compliance
As at December 31, 2025, the Company was in compliance with all financial covenants and limitations associated with the outstanding borrowings and credit facilities.
Credit Ratings
Various ratings organizations review the Company’s and Hydro One Inc.’s debt ratings from time to time. These rating organizations may take various actions, positive or negative. The Company cannot predict what actions rating agencies may take in the future. The failure to maintain the Company’s current credit ratings could adversely affect the Company’s financial condition and results of operations, and a downgrade in the Company’s credit ratings could restrict the Company’s ability to access debt capital markets and increase the Company’s cost of debt.
As at December 31, 2025, Hydro One’s long-term debt ratings were as follows:
Rating AgencyLong-term Debt
Rating
DBRS LimitedA
S&P Global Ratings
 A-
As at December 31, 2025, Hydro One Inc.’s long-term and short-term debt ratings were as follows:
Rating AgencyShort-term Debt
Rating		Long-term Debt
Rating
DBRS Limited
R-1 (low)
A (high)
Moody’s RatingsPrime-2A3
S&P Global Ratings
A-1 (Mid)A
Effect of Interest Rates
The Company is exposed to fluctuations of interest rates as its regulated return on equity (ROE) is derived using a formulaic approach that takes into account changes in benchmark interest rates for Government of Canada debt and the A-rated utility corporate bond yield spread. The Company issues debt from time to time to refinance maturing debt and for general corporate purposes. The Company is therefore exposed to fluctuations in interest rates in relation to such issuances of debt. See section “Risk Management and Risk Factors - Risks Relating to Hydro One’s Business - Market, Financial Instrument and Credit Risk” for more details.
Pension Plan
In 2025, Hydro One made cash contributions of $68 million to its pension plan, compared to cash contributions of $75 million in 2024. The Company also incurred $124 million of net periodic benefit credit, compared to $57 million of net periodic benefit credit incurred in 2024.
In September 2025, Hydro One filed a triennial actuarial valuation of its pension plan as at December 31, 2024 which is effective for 2025 to 2027. Based on this valuation, Hydro One estimates that total Company pension contributions for 2026, 2027, 2028, 2029 and 2030 are approximately $70 million, $73 million, $77 million, $81 million, and $85 million, respectively. Future minimum contributions beyond 2027 will be updated following the actuarial funding valuation as of December 31, 2027, which is expected to be filed by no later than September 30, 2028. Should Hydro One elect to file a valuation earlier than required, contributions for 2027 would also be updated, as applicable.
The Company’s pension benefits obligation is impacted by various assumptions and estimates, such as the discount rate, rate of return on plan assets, rate of cost of living increase and mortality assumptions. A full discussion of the significant assumptions and estimates can be found in the section “Critical Accounting Estimates - Employee Future Benefits”.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
OTHER OBLIGATIONS
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Summary of Contractual Obligations and Other Commercial Commitments
The following table presents a summary of Hydro One’s debt and other major contractual obligations and commercial commitments:

As at December 31, 2025 (millions of dollars)

Total		Less than
1 year
   1-3 years		   
3-5 years		More than
5 years
Contractual obligations (due by year)
Long-term debt - principal repayments19,045 925 1,175 1,900 15,045 
Long-term debt - interest payments11,444 792 1,526 1,399 7,727 
Short-term notes payable100 100 — — — 
Pension contributions1
386 70 150 166 — 
Outsourcing and other agreements
147 48 80 2 17 
Environmental and asset retirement obligations104 10 8 17 69 
Lease obligations45 16 24 4 1 
Total contractual obligations31,271 1,961 2,963 3,488 22,859 
Other commercial commitments (by year of expiry)
Operating Credit Facilities3,300 — — 3,300 — 
Letters of credit2
191 191 — — — 
Guarantees3
540 540 — — — 
Total other commercial commitments4,031 731 — 3,300 — 
1 Contributions to the Hydro One Pension Plan are based on actuarial reports, including valuations performed at least every three years, and actual or projected levels of pensionable earnings, as applicable. The most recent actuarial valuation was performed effective December 31, 2024 and filed on September 23, 2025.
2 Letters of credit consist of $166 million letters of credit related to retirement compensation arrangements, an $18 million letter of credit provided to the IESO for prudential support, and $7 million in letters of credit for various operating purposes.
3 Guarantees consist of $475 million prudential support provided to the IESO by Hydro One Inc. on behalf of its subsidiaries, as well as $60 million of guarantees provided by Hydro One to ONroute relating to OCN LP (OCN Guarantee) and $5 million relating to Aux Energy Inc.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
REGULATION
The following table summarizes the key elements and status of Hydro One’s electricity rate applications:
ApplicationYear
Rate Base Approved/Proposed
(millions of dollars)
Base Revenue Requirement Approved/Proposed
(millions of dollars)
Status


Transmission:
Hydro One Networks1
202516,2712,168Approved in November 2022
202617,1482,277Approved in November 2022
202717,9402,362Approved in November 2022
B2M LP202545538Approved in November 2024
202644738
Approved in October 20252
202744039
Approved in October 20252
202843339
Approved in October 20252
202942637
Approved in October 20252
HOSSM3
2017-202621841Approved in January 2016
CLLP202520117Approved in November 2024
202620917
Approved in December 20252
202720616
Approved in December 20252
202820416
Approved in December 20252
202920116
Approved in December 20252
NRLP20251109Approved in November 2024
20261089
Approved in October 20252
20271079
Approved in October 20252
20281059
Approved in October 20252
20291049
Approved in October 20252
Distribution:
Hydro One Networks1
202510,5731,886Approved in November 2022
202611,1531,985Approved in November 2022
202711,6562,071Approved in November 2022
Hydro One Remotes4
2023-202758128Approved in March 2023
1 Revenue requirements for 2025 to 2027 do not include the impacts of updates filed with the regulator per the annual application process to reflect the latest OEB inflation factors.
2 Under the agreed-upon revenue requirement framework, there is no longer a requirement for these LPs to file annual update applications with the OEB throughout the rate term, except for the one-time update in 2025.
3 HOSSM is under a 10-year deferred rebasing period for years 2017-2026, as approved in the OEB Mergers, Amalgamations, Acquisitions and Divestitures decision dated October 13, 2016. Revenue requirement since 2019 have been subject to an approved revenue cap escalator index.
4 Revenue requirements for 2025 to 2027 will be updated per the annual application process with the regulator to reflect latest OEB inflation factors. Rate increases for Hydro One Remotes are effective May 1st of each year.
The following table summarizes the status of Hydro One’s Leave to Construct Applications with the OEB for significant transmission projects as at December 31, 2025:
ApplicationStatus
Welland Thorold Power Line Project
Filed in November 20251
Waasigan Transmission Line Project
Approved in April 20241
St. Clair Transmission Line Project
Approved in December 20242
1 See section “Major Transmission Capital Investment Projects” and “Other Developments - Welland Thorold Power Line”. Under Hydro One’s equity partnership model, First Nations communities would have an opportunity to acquire a 50% equity stake in the transmission line component of the project.
2 See section “Major Transmission Capital Investment Projects” and “Other Developments - Supporting Critical Infrastructure in Southwestern Ontario.” Under Hydro One’s equity partnership model, First Nations communities would have an opportunity to acquire a 50% equity stake in the transmission line component of the project.







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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
OEB Cost of Capital Policy Review
On March 6, 2024, the OEB commenced a hearing on its own motion to consider the methodology for determining the values of the cost of capital parameters and deemed capital structure to be used in the rate-setting process, as well as the methodology for determining the OEB’s prescribed interest rates and matters related to the Incremental Cloud Computing Implementation Costs deferral account, including what type of interest rate, if any, should apply to the account. On March 27, 2025, the OEB issued its Decision and Order, issuing new cost of capital parameters and confirming that the new cost of capital parameters will take effect at a utility’s next rebasing rate application. The OEB’s approach for deemed capital structure remained unchanged at 40% equity and 60% debt, for transmission and distribution electricity utilities. The OEB also concluded that the prescribed interest rate for deferral and variance accounts will continue to apply to the Incremental Cloud Computing Implementation Costs deferral account, and that each utility, in its next rebasing rate application, can propose the treatment of any future cloud solutions during the rate term, which could include a new cloud solution deferral account. If no proposal is made during that rebasing rate application, the account will be closed.
Extended Horizons Variance Account
On March 20, 2025, the OEB established a generic deferral and variance account, effective November 18, 2024. This variance account allows rate-regulated electricity distributors to record the incremental revenue requirement impacts resulting from reductions in the forecasted customer capital contributions embedded in distribution rates related to the OEB’s amendments to the Distribution System Code in December 2024, which extend the connection horizon and revenue horizon for certain customer connections. As at December 31, 2025, the balance in the account is immaterial.
B2M LP
On May 23, 2024, Hydro One Networks, on behalf of B2M LP, submitted B2M LP’s five-year Transmission Revenue Requirement Application for the 2025 to 2029 period. On November 21, 2024, the OEB issued a Decision and Order approving B2M LP’s five-year revenue requirement application, which includes a 2025 base revenue requirement of $38 million. Under the agreed-upon revenue requirement framework, there is no longer a requirement for B2M LP to file annual update applications with the OEB throughout the rate term, except for a one-time update in 2025, which the OEB approved in October 2025, setting the revenue requirements for 2026-2029.
NRLP
On May 23, 2024, Hydro One Networks, on behalf of NRLP, submitted NRLP’s five-year Transmission Revenue Requirement Application for the 2025 to 2029 period. On November 21, 2024, the OEB issued a Decision and Order approving NRLP’s revenue requirement application, which includes a 2025 base revenue requirement of $9 million. Under the agreed-upon revenue requirement framework, there is no longer a requirement for NRLP to file annual update applications with the OEB throughout the rate term, except for a one-time update in 2025, which the OEB approved in October 2025, setting the revenue requirements for 2026-2029.
CLLP
On July 12, 2024, Hydro One Networks, on behalf of CLLP, submitted CLLP’s five-year Transmission Revenue Requirement Application for the 2025 to 2029 period. On December 17, 2024, the OEB issued a Decision and Order approving CLLP’s revenue requirement application, which includes a 2025 base revenue requirement of $17 million, effective January 1, 2025. Under the agreed-upon revenue requirement framework, there is no longer a requirement for CLLP to file annual update applications with the OEB throughout the rate term, except for a one-time update in 2025, which the OEB approved in December 2025, setting the revenue requirements for 2026-2029.
Building Broadband Faster Act, 2021
In March 2021, the Province of Ontario (Province) introduced Bill 257, Supporting Broadband and Infrastructure Expansion Act, 2021, to create a new act entitled the Building Broadband Faster Act, 2021 (BBFA) that is aimed at supporting the timely deployment of broadband infrastructure within unserved and underserved rural Ontario communities. Bill 257 received Royal Assent on April 12, 2021. Bill 257 amended the Ontario Energy Board Act, 1998 (OEBA) to provide the Province with regulation-making authority regarding the development of, access to, or use of electricity infrastructure for non-electricity purposes. The BBFA Guideline and two regulations informing the legislative changes were also published in 2021, with a third regulation on annual wireline attachment rate for telecommunications carriers issued in December 2021. The most recent Order and Decision from the OEB adjusts the annual wireline attachment rate to $39.14 per attacher per pole, effective January 1, 2025.
In March 2022, the Province introduced Bill 93 (Getting Ontario Connected Act, 2022). Bill 93 received Royal Assent on April 14, 2022. Bill 93 amends the BBFA to ensure that organizations that own underground utility infrastructure near a designated high-speed internet project provide timely access to their infrastructure data, which would allow internet service providers to quickly start work on laying down underground high-speed internet infrastructure.
A regulation regarding electricity infrastructure and designated broadband projects under the OEBA (O.Reg. 410/22) came into force on April 21, 2022. On July 7, 2022, the OEB established a deferral account for rate-regulated distributors to record incremental costs associated with carrying out activities pertaining to designated broadband projects. In September 2022, the
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Company launched its choice-based operating model to provide internet service providers with choices on how to access the Company’s infrastructure in order to effectively execute designated broadband projects. On March 28, 2023, the Province amended the OEBA (O.Reg. 410/22) with respect to performance timelines associated with designated broadband projects.
On August 14, 2023, the third edition of the BBFA Guideline was issued with amendments providing additional guidance to support the implementation of legislative and regulatory requirements, including a framework to support cost sharing for pole attachments and make-ready work.
The Company has developed and adapted an appropriate management framework that meets the government’s objectives, including arrangements to sustain the Company’s revenues and recovery of reasonable associated costs.
On October 31, 2024, the Ministry of Infrastructure (MOI) announced that it has developed a program to deliver up to $400 million in subsidies to internet service providers (ISPs) for work associated with designated broadband projects. The program is intended to enable ISPs to successfully and safely attach their material and equipment to the Company’s poles to bring connectivity to rural communities as part of a designated broadband project. A portion of the subsidies will be used to reimburse Hydro One Networks on behalf of ISPs for their share of enablement costs incurred to facilitate the program to date (see section “Related Party Transactions”).
On November 1, 2025, the Province amended a regulation made under the OEBA (O.Reg. 410/22), implementing a monthly capacity target of poles ready for deployment and extending the performance timelines associated with the designated broadband projects. Hydro One Networks must complete its share of the work before July 1, 2028.
Affordable Energy Act, 2024 and Ontario Integrated Energy Plan
In January 2024, the Electrification and Energy Transition Panel, an advisory body to the Province, released its report outlining a roadmap for Ontario’s transition to a clean energy economy. In October 2024, the Province released its vision for Ontario’s energy sector, Ontario’s Affordable Energy Future, outlining key objectives to meet growing electricity demand in Ontario. This vision was intended to help guide the Province’s first integrated energy plan (IEP), among other initiatives. In support, Bill 214, Affordable Energy Act, 2024, was introduced and subsequently received Royal Assent on December 4, 2024. The Affordable Energy Act, 2024 amended various statutes, including the Electricity Act, 1998 (Ontario) (Electricity Act) and the OEBA, providing a legislative framework to replace the Province’s long-term energy plans (including the 2017 Long-Term Energy Plan), with integrated energy plans. Whereas the focus of the long-term energy plan had been primarily on the electricity system, the integrated energy plan is intended to address all sources of energy. The amendments effected by the Affordable Energy Act, 2024 also allow the Minister, subject to the approval of the Lieutenant Governor in Council, to issue directives to the IESO and OEB setting out implementation requirements relating to the integrated energy plan. From October to December 2024, the Ministry of Energy and Mines (Ministry) (formerly the Ministry of Energy and Electrification) ran a consultation requesting feedback to assist the Province in developing its first plan.
The changes made by the Affordable Energy Act, 2024 to the OEBA, among other things, also provide the Province with the ability to make regulations specifying amendments to the Distribution System Code and the Transmission System Code in relation to certain cost allocation and cost recovery matters relating to the construction, expansion or reinforcement of distribution systems or transmission systems, or of connections to those systems. The changes made by the Affordable Energy Act, 2024 also allow regulations to be made exempting persons or things from provisions of the Distribution System Code and the Transmission System Code relating to cost allocation or cost recovery, as well as alternative provisions that apply instead.
On June 12, 2025, the Ontario government released its first IEP, Energy for Generations, which aims to leverage electricity, natural gas, hydrogen, storage and other energy sources to provide Ontario with affordable, secure, reliable and clean energy to power growth and jobs across the province. The IEP establishes a planning horizon out to 2050, including the acceleration of the development of transmission infrastructure and the modernization of the distribution grid. As part of the IEP, the government announced the advancement of several transmission projects, including the following:
•Barrie to Sudbury Transmission Line, a new single circuit 500 kV line between Essa Transformer Station (TS) and Hanmer TS, including any associated station facilities with a target in-service date of 2032, as well as early development work on a second 500 kV line;
•Orangeville to Barrie Reconductoring Project, which involves the reconductoring of Hydro One’s existing 230kV transmission lines between Orangeville TS (Orangeville) and Essa TS (Barrie), with a target in-service date of 2027;
•Bowmanville to Parkway Transmission Line (formerly known as Bowmanville to Greater Toronto Area (GTA) Transmission Line), a new double-circuit 500 kV line from Bowmanville Switching Station (SS) to an existing 500 kV station in the GTA with a target in-service in the early 2030s;
•Windsor to Lakeshore Transmission Line, a 230 kV transmission line from Lauzon Transformer Station (Windsor) to Lakeshore Transformer Station (Lakeshore) with a target in-service date of 2032; and
•Greenstone Transmission Line, a new 230 kV transmission line between Longlac TS (Geraldton) to Nipigon Generation Station and connecting into the East-West Tie near Nipigon Bay, and associated station facilities, with a target in-service in 2032.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
On June 16, 2025, the Ministry announced a series of proposals to take certain actions to facilitate the timely development of several transmission projects to further the objectives outlined in the IEP.
The Ministry proposed, subject to required approvals, to declare the five transmission projects as priority projects. The second Barrie to Sudbury Transmission Line was not proposed to be declared priority at the time.
The Ministry also proposed to bring forward Orders in Council (to be recommended by the Minister of Energy and Mines (Minister)) and companion directive, that would, if approved, direct the OEB to amend Hydro One Networks’ transmitter licence to require it to undertake development work and seek all necessary approvals to construct the Barrie to Sudbury Transmission Line, the Bowmanville to Parkway Transmission Line and the Greenstone Transmission Line, and to undertake development work on the second Barrie to Sudbury Transmission Line. The Minister had previously, on March 31, 2022, directed the OEB to amend Hydro One Networks’ licence to require it to develop and seek approvals for the Windsor to Lakeshore Transmission Line. The Orangeville to Barrie Reconductoring Project does not require designation because this project relates to existing Hydro One Networks transmission infrastructure. The consultation period for the proposals was announced on June 16, 2025, and closed on August 15, 2025.
On November 21, 2025, the Minister notified the OEB that the Orangeville to Barrie Reconductoring Project, the Windsor to Lakeshore Transmission Line and the Bowmanville to Parkway Transmission Line were declared priority projects and issued a directive to the OEB to amend Hydro One Networks’ transmission license to require it to develop and seek approvals for the Bowmanville to Parkway Transmission Line. On November 25, 2025, further to the Minister’s Directive, the OEB amended Hydro One Networks’ electricity transmission licence to allow it to develop and seek approvals for this project in accordance with the recommendations of the IESO.
On January 28, 2026, the Minister notified the OEB that the Greenstone Transmission Line was declared a priority project, and issued a directive to the OEB to amend Hydro One Networks’ transmission license, to require it to develop and seek approvals for this project. On January 29, 2026, further to the Minister’s Directive, the OEB amended Hydro One Networks’ electricity transmission license to allow it to develop and seek approvals for this project in accordance with the recommendations of the IESO.
On February 6, 2026, the Minister notified the OEB that the first Barrie to Sudbury Transmission Line was declared a priority project, and issued a directive to the OEB to amend Hydro One Networks’ transmission license to require it to develop and seek approvals for both Barrie to Sudbury Transmission Lines, and to undertake development work on the second Barrie to Sudbury Transmission Line. On February 10, 2026, further to the Minister’s Directive, the OEB amended Hydro One Networks’ electricity transmission licence to allow it to develop and seek approvals for the project in accordance with the recommendations of the IESO.
The IEP also addressed the need for additional transmission capacity in the Red Lake Area in Northwestern Ontario. In August 2025, the IESO released the Northwest Region Integrated Regional Resource Plan Addendum (Addendum). The Addendum recommends the urgent development of the Red Lake Transmission Line, a one double-circuit 230 kV transmission line that will run from Dryden TS to Ear Falls TS, and another double-circuit 230-kV transmission line that will run from Ear Falls TS to Red Lake SS, along with associated station facilities, to meet growing capacity needs after 2028. Hydro One will work with the IESO to identify the earliest achievable in-service date for the project. On October 29, 2025, the Ministry announced a proposal to bring forward an Order in Council (to be recommended by the Minister) to declare the project as priority and a companion directive, that would, if approved, direct the OEB to amend Hydro One Networks’ transmitter licence to require it to undertake development work and seek all necessary approvals to construct the project. The consultation period for the proposal closed on December 13, 2025.
On July 31, 2025, the IESO announced the launch of the Transmitter Selection Framework (TSF) Registry. Registration enables transmitters to participate in future competitive IESO transmission procurements. Hydro One Networks intends to submit an application to be included in the TSF Registry.
OTHER DEVELOPMENTS
EWT LP
On March 4, 2025, Hydro One Networks completed the acquisition of an approximate 48% interest in the EWT LP for approximately $261 million in cash, including closing adjustments. The partnership owns the East-West Tie Line, a 450-kilometre, 230-kV double-circuit transmission line spanning between Wawa and Thunder Bay, along the north shore of Lake Superior.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Northern Ontario Voltage Study
In December 2023, the IESO published its Northern Ontario Voltage Study Report (Bulk System Reactive Requirements in Northern Ontario) (the Study), which recommended installation of reactive compensation devices at several stations in Northern Ontario to address both current and future system conditions that are expected once new Northern transmission lines are in-service. This study includes projects being developed by Hydro One, including: the East-West Tie Station Expansion, the Waasigan Transmission Line Project, the Northeast Power Line (previously referred to as the Hanmer to Mississagi Line), and the North Shore Link (previously referred to as Mississagi to Third Line Line).
In March 2024, the Company received a letter from the IESO recommending Hydro One proceed with the implementation of the reactive devices, in line with the timelines identified by the IESO. The Company has reviewed and assessed the results of the Study and recommendation from the IESO and has incorporated them into the associated projects so as to meet the timelines identified by the IESO.
Supporting Critical Transmission Infrastructure in Southwestern Ontario
St. Clair Transmission Line Project
In March 2022, the Province issued an Order in Council with a directive from the Minister (formerly the Minister of Energy) to the OEB, requiring Hydro One Networks to develop and seek approvals for the St. Clair Transmission Line Project, a 230 kV line from Lambton Transmission Station to Chatham Switching Station. In response to the directive, the OEB amended Hydro One Networks’ transmission license in April 2022 to develop and seek approval for the St. Clair Transmission Line Project. On May 28, 2024, Hydro One Networks filed a leave-to-construct application seeking OEB approval of the project. The total project is expected to cost approximately $472 million, with $335 million attributable to transmission line work and $137 million attributable to station costs. On December 10, 2024, the OEB issued its Decision and Order granting leave to construct as requested in the application, with standard conditions of approval.
On September 9, 2025, Hydro One commenced the construction of the St. Clair Transmission Line Project, which is expected to be in service by 2027.
Supporting Critical Transmission Infrastructure in Northeastern and Eastern Ontario
On July 10, 2023, the Ministry announced a proposal to take certain actions to facilitate the timely development of three transmission projects across Northeastern and Eastern Ontario: North Shore Link, Northeast Power Line, and Durham Kawartha Power Line. On October 23, 2023, the Minister (formerly the Minister of Energy) directed the OEB to amend Hydro One Networks’ licence to require it to develop and seek approvals for these three priority transmission line projects. On November 14, 2023, further to the Minister’s Directive, the OEB amended Hydro One Networks’ electricity transmission licence to require it to develop and seek approvals for these projects in accordance with the recommendations of the IESO.
On August 1, 2024, the Ministry announced a proposal to declare the Wawa Timmins Power Line (formerly Wawa to Porcupine line) as a priority project and designate Hydro One Networks, as the transmitter. These actions are intended to facilitate the timely development of a new 230 kV, 260 km transmission line in Northeastern Ontario from the Wawa Transformer Station (south of Wawa) to the Porcupine Transformer Station (Timmins area). Based on IESO forecasts, the government has identified a targeted in-service date of 2030; planned development work will inform the final construction schedule. The proposal was open for a 45 day consultation period ending September 15, 2024. On November 28, 2024, the Minister directed the OEB to amend Hydro One Networks’ transmission license to require it to develop and seek approvals for this project. On December 23, 2024, further to the Minister’s Directive, the OEB amended Hydro One Networks’ electricity transmission licence to allow it to develop and seek approvals for this project in accordance with the recommendations of the IESO.
Wellington to Preston Line Project
As part of its integrated regional resource plan process for the Kitchener-Waterloo-Cambridge-Guelph Region, on September 29, 2025 the IESO, in conjunction with a technical working group (working group), issued a letter to Hydro One Networks with respect to an urgent need for certain transmission infrastructure. As part of the letter, the IESO identified the following two investments for Hydro One to complete:
•Development and initiating construction of a new 500/230 kV autotransformer station in Puslinch, with a target in-service date of 2031; and
•Development and initiating construction of a new 230 kV transmission line from Puslinch to Preston TS, with a target in-service date of 2031.
The IESO and the working group recommend that Hydro One proceed immediately with development of these projects, including pursuing the required environmental and regulatory approvals.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Welland Thorold Power Line
The IESO’s 2022 integrated regional resource plan (IRRP) for the Niagara region identified growing electricity demand in the Welland area. To support this projected increase, the IRRP recommended enhancing transmission capacity through the development of a new transmission line. This need was subsequently reaffirmed in the 2023 Regional Infrastructure Plan. On November 17, 2025, Hydro One Networks filed a leave-to-construct application seeking OEB’s approval for the Welland to Thorold Power Line, a new double-circuit 230-kilovolt transmission line between Abitibi Consolidated Junction, within an existing Hydro One transmission corridor in Thorold and Crowland TS in Welland. In addition to the line work, Hydro One will also expand Crowland TS. See section "Major Transmission Capital Investment Projects” for additional information.
Bill 2, Protect Ontario Through Free Trade Within Canada Act, Bill 5, Protect Ontario by Unleashing our Economy Act, and Bill 40, Protect Ontario by Securing Affordable Energy for Generations Act
On April 16, 2025, the Ontario Government introduced Bill 2, Protect Ontario Through Free Trade Within Canada Act, 2025. The legislation enables the province to, among other things, enter into mutual recognition agreements with other provinces to remove internal trade barriers in the movement of goods, services, and labour.
On April 17, 2025, the Ontario Government introduced Bill 5, the Protect Ontario by Unleashing our Economy Act, which aims to streamline the permitting and authorization process for certain projects, including major infrastructure, including through proposed changes to the environmental permitting process in Ontario.
On June 3, 2025, the Ontario Government introduced Bill 40, Protect Ontario by Securing Affordable Energy for Generations Act, 2025. The legislation enables the establishment of variance accounts for foreign equipment restrictions and introduces regulation-making authority with regards to data centre connections in Ontario.
Bill 2 and Bill 5 received Royal Assent on June 5, 2025. Bill 40 received Royal Assent on December 11, 2025. The Company is assessing the potential impacts of this legislation and associated regulations on Hydro One.
Sustainability Report
The Hydro One 2024 Sustainability Report entitled “A Better and Brighter Future For All” is available on the Company’s website at www.hydroone.com/sustainability.
The 2024 Sustainability Report highlights the alignment of sustainability with Hydro One’s refreshed corporate strategy to enable the Company to continue to deliver for its customers and all Ontarians. The report discloses the Company’s performance across a range of environmental, social and governance (ESG) measures from January 1, 2024 to December 31, 2024.
HYDRO ONE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Board of Directors
Effective March 24, 2025, Timothy Hodgson, then chair of the Board, commenced an unpaid leave of absence to pursue candidacy in the federal election. The board appointed Susan Wolburgh Jenah as Interim Chair on the same date.
On April 28, 2025, Mr. Hodgson formally resigned from the Board. Subsequently, the Board appointed Melissa Sonberg as chair of the Board, with the appointment taking effect on June 4, 2025.
Director Cherie Brant did not stand for re-election at the Annual and Special Meeting of Shareholders on June 24, 2025.
Effective August 14, 2025, the Board appointed Michael W. Rencheck as a director.
Executive Officers
Effective February 18, 2025, Gillian Whitebread joined Hydro One as Executive Vice President (EVP), Head of Human Resources. On the same day, Megan Telford’s title became EVP, Strategy and Energy Transition.
Effective July 21, 2025, Megan Telford was appointed as Chief Operating Officer, and Lisa Pearson was appointed as EVP, Corporate Affairs.
Effective August 25, 2025, David Lebeter commenced a temporary compassionate care leave. The Board selected Harry Taylor to become the Interim President and Chief Executive Officer (CEO). Harry Taylor continued to serve as EVP, Chief Financial and Regulatory Officer during the interim period. David Lebeter returned from leave on November 12, 2025.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
HYDRO ONE WORK FORCE
As at December 31, 2025, Hydro One had a skilled and flexible work force of approximately 7,200 (2024 - 7,300) regular employees and 1,900 (2024 - 2,100) non-regular employees province-wide, comprising a mix of skilled trades, engineering, professional, managerial and executive personnel. Hydro One’s regular employees are supplemented primarily by accessing a large external labour force available through arrangements with the Company’s trade unions for contingent workers, sometimes referred to as “hiring halls”, and also by access to contract personnel. The hiring halls offer Hydro One the ability to flexibly use highly trained and appropriately skilled workers on a project-by-project and seasonal basis.
The following table sets out the number of Hydro One employees as at December 31, 2025:
Regular
Employees		Non-Regular EmployeesTotal
Power Workers' Union (PWU)1
4,201 626 4,827 
Society of United Professionals (Society)2,020 29 2,049 
Canadian Union of Skilled Workers (CUSW) and construction building trade unions— 1,270 1,270 
Total employees represented by unions6,221 1,925 8,146 
Management and non-represented employees930 22 952 
Total employees2
7,151 1,947 9,098 
1 Includes 510 non-regular “hiring hall” employees covered by the PWU agreement.
2    The average number of Hydro One employees in 2025 was approximately 9,600, consisting of approximately 7,200 regular employees and approximately 2,400 non-regular employees.
Collective Agreements
On May 4, 2025, Hydro One Inc. reached tentative renewal agreements with the PWU for both its main collective agreement and its Customer Service Operations (CSO) collective agreement which merges the two agreements into one. On June 2, 2025, the agreement was ratified by the PWU-represented employees for a term from October 1, 2025, to March 31, 2028.
Hydro One Inc.’s collective agreement with the Society expired on September 30, 2025. On January 13, 2026, Hydro One and the Society announced that a settlement for a renewal collective agreement had been reached. On January 30, 2026, the Society-represented employees ratified the collective agreement, with a term of October 1, 2025 to March 31, 2028.
The construction building trade unions have collective agreements with the Electrical Power Systems Construction Association (EPSCA). EPSCA is an employers’ association of which Hydro One is a member. All 20 of the EPSCA construction collective agreements, which bind Hydro One, expired on April 30, 2025. EPSCA negotiated five-year renewal agreements, covering the period from May 1, 2025 to April 30, 2030, for all 20 collective agreements.
Stock-based Compensation
The Company granted Deferred Share Units (DSUs) and LTIP awards, consisting of Performance Share Units (PSUs) and Restricted Share Units (RSUs) to Directors and Management. As at December 31, 2025 and 2024, the following LTIP and other awards were outstanding:
As at December 31 (number of units)
20252024
PSUs399,181 286,554 
RSUs391,623 322,925 
Management DSUs80,404 85,690 
Director DSUs102,256 107,296 
NON-GAAP FINANCIAL MEASURES
Hydro One uses a number of non-GAAP financial measures to assess its performance. The Company presents FFO or “funds from operations” to reflect a measure of the Company’s cash flow; revenues, net of purchased power, to reflect the impact of revenue on net income; and net debt to reflect a measure of the Company’s financial leverage.
Hydro One also uses financial ratios that are non-GAAP ratios such as the net debt to capitalization ratio and annualized FFO to net debt ratio to reflect a measure of the Company’s financial leverage, and the earnings coverage ratio to reflect a measure of liquidity.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
FFO
FFO is defined as net cash from operating activities, adjusted for changes in non-cash balances related to operations and distributions to noncontrolling interest. Management believes that FFO is helpful as a supplemental measure of the Company’s operating cash flows as it excludes timing-related fluctuations in non-cash operating working capital and cash flows not attributable to common shareholders. As such, management believes that FFO provides a consistent measure of the cash generating performance of the Company’s assets.
The following table provides a reconciliation of reported GAAP results to non-GAAP results on a consolidated basis.
Quarter ended (millions of dollars)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Net cash from operating activities867 713 605 510 703 623 746 462 
Changes in non-cash balances related to operations(214)(31)14 178 (190)18 (221)144 
Distributions to noncontrolling interest(1)(4)(2)(5)(2)(2)(2)(4)
FFO652 678 617 683 511 639 523 602 
Twelve months ended (millions of dollars)
Dec 31, 2025Dec 31, 2024
FFO2,630 2,275 
Revenues, Net of Purchased Power
Revenues, net of purchased power, is defined as revenues less the cost of purchased power; distribution revenues, net of purchased power, is defined as distribution revenues less the cost of purchased power. These measures are used internally by management to assess the impacts of revenue on net income and are considered useful because they exclude the cost of power that is fully recovered through revenues and therefore net income neutral.
The following tables provide a reconciliation of reported GAAP revenues to non-GAAP revenues, net of purchased power, on a consolidated basis.
Quarter ended (millions of dollars)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Revenues2,268 2,299 2,066 2,408 2,095 2,192 2,031 2,166 
Less: Purchased power1,287 1,080 899 1,220 1,060 1,047 940 1,096 
Revenues, net of purchased power981 1,219 1,167 1,188 1,035 1,145 1,091 1,070 
Quarter ended (millions of dollars)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Distribution revenues1,757 1,605 1,434 1,761 1,583 1,551 1,436 1,605 
Less: Purchased power1,287 1,080 899 1,220 1,060 1,047 940 1,096 
Distribution revenues, net of purchased power470 525 535 541 523 504 496 509 
Year ended December 31 (millions of dollars)
20252024
Revenues9,041 8,484 
Less: Purchased power4,486 4,143 
Revenues, net of purchased power4,555 4,341 
Year ended December 31 (millions of dollars)
20252024
Distribution revenues6,557 6,175 
Less: Purchased power4,486 4,143 
Distribution revenues, net of purchased power2,071 2,032 
Net Debt
The Company uses net debt as an alternative measure of outstanding debt. Management considers net debt as an important measure in assessing the financial leverage of the Company. Net debt is used by management to assess the Company’s overall debt position and financial leverage.
The following table provides a reconciliation of net debt as reported in the Company’s Consolidated Financial Statements.
Year ended December 31 (millions of dollars)
20252024
Short-term notes payable100 200 
Less: cash and cash equivalents(549)(716)
Long-term debt (current portion)925 1,150 
Long-term debt (long-term portion)18,092 16,329 
Net Debt18,568 16,963 
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Net Debt to Capitalization Ratio
The Company believes that the net debt to capitalization ratio is an important non-GAAP ratio as a measure of the Company’s financial leverage. Net debt to capitalization ratio has been calculated as net debt, as described above, divided by net debt plus total shareholders’ equity, but excluding any amounts related to noncontrolling interest. Management believes that the net debt to capitalization ratio is helpful as a measure of the proportion of debt in the Company's capital structure.
Year ended December 31 (millions of dollars)
20252024
Net debt (A)18,568 16,963 
Shareholders' equity (excluding noncontrolling interest)12,648 12,089 
Net debt plus shareholders' equity (B)31,216 29,052 
Net Debt-to-capitalization ratio (A/B)59.5 %58.4 %
Annualized FFO to Net Debt
Management believes that the annualized FFO to net debt ratio is helpful as a measure of the Company’s financial leverage. Annualized FFO to net debt ratio has been calculated as FFO (see section “Non-GAAP Financial Measures - FFO”) on a rolling twelve-month period divided by net debt at the period end date (see section “Non-GAAP Financial Measures – Net Debt”). Management believes the annualized FFO to net debt ratio is helpful as a measure of the company’s ability to pay off its debt using the Company’s net operating income.
The following table provides a reconciliation of reported GAAP results to non-GAAP results on a consolidated basis.
Twelve months and period ended (millions of dollars)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Annualized FFO (A)2,630 2,489 2,450 2,356 2,275 2,238 2,221 2,256 
Net Debt (B)18,568 18,346 18,030 17,615 16,963 16,679 16,308 16,016 
Annualized FFO to Net Debt (A/B)14.2 %13.6 %13.6 %13.4 %13.4 %13.4 %13.6 %14.1 %
Earnings Coverage Ratio
Earnings coverage ratio is defined as earnings before income taxes, financing charges and equity income attributable to shareholders, divided by the sum of financing charges and capitalized interest, and is calculated on a rolling twelve-month basis. The Company believes that the earnings coverage ratio is an important non-GAAP measure in the management of its liquidity.
Quarter ended (millions of dollars)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Net income attributable to common shareholders233 421 327 358 200 371 292 293 
Income tax expense30 60 61 68 17 56 57 51 
Financing charges175 172 169 163 158 158 157 148 
Equity income3 6 — — — — — — 
Earnings before income taxes, financing charges and equity income attributable to common shareholders 435 647 557 589 375 585 506 492 
Twelve months ended (millions of dollars)
Dec 31, 2025Dec 31, 2024
Earnings before income taxes, financing charges and equity income attributable to common shareholders (A)2,228 1,958 
Quarter ended (millions of dollars)
Dec 31, 2025Sep 30, 2025Jun 30, 2025Mar 31, 2025Dec 31, 2024Sep 30, 2024Jun 30, 2024Mar 31, 2024
Financing charges175 172 169 163 158 158 157 148 
Capitalized interest 29 30 27 24 24 24 22 19 
Financing charges and capitalized interest 204 202 196 187 182 182 179 167 
Twelve months ended (millions of dollars)
Dec 31, 2025Dec 31, 2024
Financing charges and capitalized interest (B)789 710 
Earnings coverage ratio = A/B2.8 2.8 
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
RELATED PARTY TRANSACTIONS
The Province is a shareholder of Hydro One with approximately 47.1% ownership as at December 31, 2025. The Ministry and MOI are related parties to Hydro One because they are controlled by the Province. The IESO, Ontario Power Generation Inc. (OPG), Ontario Electricity Financial Corporation (OEFC), and the OEB are related parties to Hydro One because they are controlled or significantly influenced by the Ministry. Hydro One also has transactions in the normal course of business with various government ministries and organizations in Ontario that fall under the purview of the Province. The following is a summary of the Company’s related party transactions during the years ended December 31, 2025 and 2024:
Year ended December 31 (millions of dollars)
Related PartyTransaction20252024
ProvinceDividends paid370 350 
Ministry
Broadband subsidy1
27 — 
MOI
Broadband subsidy1
19 43 
IESOPower purchased3,011 2,686 
Revenues for transmission services2,388 2,252 
Amounts related to electricity rebates1,110 1,170 
Distribution revenues related to rural rate protection256 255 
Distribution revenues related to Wataynikaneyap Power LP133 119 
Distribution revenues related to supply of electricity to remote northern communities50 48 
Funding received related to Conservation and Demand Management programs— 1 
OPGPower purchased23 18 
Transmission revenues related to provision of services and supply of electricity2 2 
Distribution revenues related to provision of services and supply of electricity8 5 
Other revenues related to provision of services and supply of electricity2 1 
Capital contribution received from OPG20 3 
Costs related to the purchase of services2 1 
OEFCPower purchased from power contracts administered by the OEFC2 1 
OEBOEB fees14 12 
1 See section “Building Broadband Faster Act, 2021”, During 2025, Ministry replaced MOI in making broadband subsidy payments to Hydro One.
RISK MANAGEMENT AND RISK FACTORS
Hydro One is subject to numerous risks and uncertainties. Critical to Hydro One’s success is the identification, management and, to the extent possible, mitigation of these risks. Hydro One’s Enterprise Risk Management (ERM) program assists decision-makers throughout the organization with the management of key business risks, including new and emerging risks and opportunities.
The material risks relating to Hydro One and its business that the Company believes would be the most likely to influence an investor’s decision to purchase Hydro One’s securities are set out in the risk factors below. These risks, if they materialize, could have a materially adverse effect on the Company or its business, financial condition, or results of operations. This list is not a comprehensive list of all the risks to the Company, and the actual effect of any of the risks cited below could be materially different from what is described below. Additionally, other risks may arise or risks currently not considered material may become material in the future.
Risks Relating to Hydro One’s Business
Regulatory Risks and Risks Relating to Hydro One’s Revenues
Risks Relating to Actual Performance Against Forecasts
The Company’s ability to recover the actual costs of providing service and earn the allowed ROE depends on the Company achieving its forecasts established and approved in the rate-setting process. Actual costs could exceed the approved forecasts if, for example, the Company incurs operations, maintenance, administration, capital and financing costs above those included in the Company’s approved revenue requirement. The inability to recover any significant difference between forecast and actual expenses and to obtain associated regulatory approvals to recover the difference could materially adversely affect the Company’s financial condition and results of operations.
Further, the OEB approves the Company’s transmission and distribution rates based on projected electricity load and consumption levels, among other factors. If actual load or consumption materially falls below projected levels, the Company’s revenue, net income and cash flows for either, or both, of these businesses could be materially adversely affected.
The Company’s current revenue requirements for its transmission and distribution businesses are based on cost and other assumptions, including inflation, that may not materialize. There is no assurance that the OEB would allow rate increases sufficient to offset unfavourable financial impacts from unanticipated changes in electricity demand or in the Company’s costs.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
The Company is subject to risk of revenue loss from other factors, such as economic trends and conditions, changes in service territory, and weather conditions that influence the demand for electricity. The Company’s overall operating results may fluctuate substantially on a seasonal and year-to-year basis based on these trends and weather conditions. For instance, a cooler than normal summer or warmer than normal winter can be expected to reduce demand for electricity below that forecast by the Company, causing a decrease in the Company’s revenues, net income and cash flows as compared to the same period of the previous year.
The Company’s load could also be negatively affected by successful conservation and demand management programs whose results exceed forecasted expectations.
Risks Relating to Non-Rate Applications to the OEB
In addition to the matters described in the “Risks Relating to Obtaining Rate Orders” subsection below, the Company is also subject to the risk that it will not obtain, or will not obtain in a timely manner, required regulatory approvals for other matters, such as leave to construct applications, applications for mergers, acquisitions, amalgamations and divestitures, and environmental approvals. Appeals of OEB decisions and/or the need to obtain required occupation rights may result in significant delays, which could also lead to increased costs and project delays.
Decisions to acquire or divest other regulated businesses licensed by the OEB are subject to OEB approval. Accordingly, there is the risk that such matters may not be approved, or that unfavourable conditions will be imposed by the OEB.
Hydro One may face increased competition with other transmitters for opportunities to build new, large-scale transmission facilities in Ontario. The Company is subject to the risk that it will not be selected to build new transmission in Ontario, which could impair growth, disrupt operations and/or development, or have other adverse impacts.
Risks Relating to Rate-Setting Models for Transmission and Distribution
The OEB approves and periodically changes the rate-setting models and methodology for the transmission and distribution businesses. Changes to the application type, filing requirements, rate-setting model or methodology, or revenue requirement determination may have a material negative impact on Hydro One’s revenue and net income. For example, the OEB may in the future decide to reduce the allowed ROE for either of these businesses, modify the formula or methodology it uses to determine the ROE, or reduce the weighting of the equity component of the deemed capital structure. Any such reduction could reduce the net income of the Company. Similarly, the OEB may in the future consider other utility remuneration models, and any such change could affect Hydro One’s revenue and net income. If the OEB was to significantly change the formula for calculating ROE or the deemed regulatory capital structure, this could result in a material adverse impact to the financial condition of the Company.
The OEB’s Custom Incentive Rate-setting model requires that the term of a custom rate application be for multi-year periods. There are risks associated with forecasting key inputs such as revenues, operating expenses and capital over such a long period. For instance, if unanticipated capital expenditures arise that were not contemplated in the Company’s most recent rate decision, the Company may be required to incur costs that may not be recoverable until a future period or not recoverable at all in future rates. This could have a material adverse effect on the Company.
When rates are set for a multi-year period, including under a Custom Incentive Rate application, the OEB expects there to be no further rate applications for annual updates within the multi-year period, unless it is consistent with OEB approved funding mechanisms or there are exceptional circumstances, with the exception of the clearance of established deferral and variance accounts. For example, the OEB does not expect to address annual rate applications for updates for cost of capital (including ROE), working capital allowance or sales volumes. If there were an increase in interest rates over the period of a rate decision and no corresponding changes were permitted to the Company’s revenue requirement (including cost of capital parameters), then the result could be a decrease in the Company’s financial performance. See also “Market, Financial Instrument and Credit Risk”.
To the extent that the OEB approves an in-service variance account for the transmission and/or distribution businesses, and should the Company fail to meet the threshold levels of in-service capital, the OEB may reclaim a corresponding portion of the Company’s revenues.
Risks Relating to Capital Expenditures
In order to be recoverable in rates, capital expenditures require the approval of the OEB. There can be no assurance that all capital expenditures, including any imposed by or resulting from government or regulatory bodies, incurred by Hydro One will be approved by the OEB. For example, capital cost overruns including those due to economic trends and conditions including inflation; the potential imposition of duties, tariffs or trade restrictions; unexpected capital expenditures in maintaining or improving the Company’s assets; unexpected costs as a result of proposed legislation, including that relating to the expansion of broadband service in Canada; may not be recoverable in transmission or distribution rates. To the extent possible, Hydro One aims to mitigate this risk by ensuring expenditures are reasonable and prudent, and also by seeking from the regulator clear policy direction on cost responsibility, and by obtaining pre-approval of the need for capital expenditures.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Any regulatory decision by the OEB to disallow or limit the recovery of any capital expenditures would lead to a lower-than-expected approved revenue requirement or rate base, potential asset impairment or charges to the Company’s results of operations, any of which could have a material adverse effect on the Company.
Risks Relating to Obtaining Rate Orders
The Company is subject to the risk that the OEB will not approve the Company’s transmission and distribution revenue requirements requested in outstanding or future applications for rates. Rate applications for revenue requirements are subject to the OEB’s review process, usually involving participation from intervenors and a public hearing process. There can be no assurance that resulting decisions or rate orders issued by the OEB will permit Hydro One to recover all costs actually incurred, including the costs of debt and income taxes, or to earn a particular ROE. A failure to obtain acceptable rate orders, or approvals of appropriate returns on equity and the ability to recover in rates costs actually incurred, may materially adversely affect: Hydro One’s transmission and distribution businesses, the undertaking or timing of capital expenditures, ratings assigned by credit rating agencies, the cost and issuance of long-term debt, and other matters, any of which may in turn have a material adverse effect on the Company. In addition, there is no assurance that the Company will receive regulatory decisions in a timely manner and, therefore, the Company may incur costs before having an approved revenue requirement and cash flows could be impacted. The Company is also subject to the risk that the OEB could change the regulatory treatment of certain costs which may affect the Company’s accounting treatment of and ability to recover such costs.
Risk of Recoverability of Total Compensation Costs
Hydro One manages all of its total compensation costs, including pension and other post-employment and post-retirement benefits (OPEBs), subject to restrictions and requirements imposed by the collective bargaining process and legislative requirements. Any element of total compensation costs which is disallowed in whole or part by the OEB and therefore not recoverable from customers in rates could result in costs which could be material and could decrease net income, which could have a material adverse effect on the Company. The OEB Act prohibits Hydro One from recovering specified executive compensation costs in its rates.
The Company provides OPEBs to qualifying employees. Hydro One currently maintains the accrual accounting method with respect to OPEBs. If the OEB directed Hydro One to transition to a different accounting method for OPEBs or otherwise adjusted the basis of recovery for OPEB costs, this could result in income volatility, due to an inability of the Company to book the difference between the accrual and cash as a regulatory asset, and the Company might not be able to recover some costs. A determination that some of the Company’s post-employment and post-retirement benefit costs are not recoverable could have a material adverse effect on the Company.
Risks Relating to Government Action
The Province is, and is likely to remain, the largest shareholder in Hydro One Limited. The Province may be in a position of conflict from time to time as a result of being an investor in Hydro One Limited and also being a government actor setting broad policy objectives in the electricity industry. Government actions may not be in the interests of the Company or investors.
Governments may pass legislation or issue regulations at any time, including legislation or regulation impacting Hydro One, which could have potential material adverse effects on Hydro One and its business. Such government actions may include, but are not limited to, legislation, regulation, directives or shareholder action intended to reduce electricity rates, place constraints on compensation, or affect the governance of Hydro One. Such government actions could adversely affect the Company’s financial condition and results of operations, as well as public opinion and the Company’s reputation. Government action may also hinder Hydro One’s ability to pursue its strategy and/or objectives.
The Province has in the past passed legislation to place limits on executive compensation at Hydro One and there is no guarantee they may not do so in the future. Potential involvement by the Province in the Company’s executive compensation practices may inhibit the Company’s ability to attract and retain qualified executive talent, which may also impact the Company’s performance, strategy and/or objectives. The failure to attract and retain qualified executives could have a material adverse effect on the Company.
Government action may also impact the Company’s credit ratings as the Company’s credit ratings reflect, in part, the rating agencies’ assessment of government involvement in the business of Hydro One. The Company cannot predict what actions rating agencies may take in the future, positive or negative, including in response to government action or inaction relating to or impacting Hydro One. The failure to maintain the Company’s current credit ratings could adversely affect the Company’s financial condition and results of operations, and a downgrade in the Company’s credit ratings could restrict the Company’s ability to access debt capital markets and increase the Company’s cost of debt.
Indigenous Claims Risk
Some of the Company’s current and proposed transmission and distribution assets are or may be located on reserve (as defined in the Indian Act (Canada)) (Reserve) lands, or lands over which Indigenous people have Aboriginal, treaty, or other legal rights or claims. Some Indigenous leaders, communities, and their members have made assertions related to sovereignty and jurisdiction over Reserve lands and traditional territories (land traditionally occupied or used by a First Nation, Métis or Inuit
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
group) and can assert their claims through the courts, tribunals, or direct action. These claims, and/or the settlement or resolution of these claims could have a material adverse effect on the Company or otherwise materially adversely impact the Company’s operations, including the development of current and future projects.
The Company’s operations and activities may give rise to the Crown having a duty to consult and potentially accommodate Indigenous communities. Procedural aspects of the Crown's duty to consult may be delegated to the Company by the Province or the federal government. A perceived failure by the Crown to sufficiently consult an Indigenous community, including communities with a traditional governance model not recognized under the Indian Act (Canada), or a perceived failure by the Company in relation to delegated consultation obligations, could result in legal challenges against the Crown and/or the Company, including judicial review or injunction proceedings, or could potentially result in direct action against the Company by a community or its citizens. If this occurs, it could disrupt or delay the Company’s operations and activities, including current and future projects, and have a material adverse effect on the Company.
Risk from Transfer of Assets Located on Reserves
The transfer orders by which the Company acquired certain of Ontario Hydro’s businesses as of April 1, 1999 did not transfer title to assets located on Reserves. The transfer of title to these assets did not occur because authorizations originally granted by the federal government for the construction and operation of these assets on Reserves could not be transferred without required consent. In several cases, the authorizations had either expired or had never been issued.
Currently, OEFC holds legal title to these assets and it is expected that the Company will manage them until it has obtained permits to complete the title transfer. To occupy Reserves, the Company must have valid permits as required by the Indian Act (Canada). For each permit, the Company may need to negotiate (an) agreement(s) with the First Nation, OEFC and any members of the First Nation who have occupancy rights. Any such agreement(s) include provisions whereby the First Nation consents to the issuance of a permit. For transmission assets, the Company must negotiate terms of payment. It is difficult to predict the aggregate amount that the Company may have to pay to obtain the required agreements from First Nations. If the Company cannot reach satisfactory agreements with the relevant First Nation to obtain federal permits, or is unable to obtain the actual federal permits for any other reason, it may have to relocate these assets to other locations and restore the lands at a cost that could be substantial. In a limited number of cases, it may be necessary to abandon a line and replace it with diesel generation facilities. In either case, the costs relating to these assets could have a material adverse effect on the Company if the costs are not recoverable in future rate orders.
Compliance with Laws and Regulations
Hydro One must comply with numerous laws and regulations affecting its business, including requirements relating to transmission and distribution companies, environmental laws, employment laws and health and safety laws. The failure of the Company to comply with these laws could have a material adverse effect on the Company’s business. See also “Environment Risk” and “Health and Safety Risk”.
For example, Hydro One’s licensed transmission and distribution businesses are required to comply with the terms of their licences, with codes and rules issued by the OEB, and with other regulatory requirements. In Ontario, the Market Rules issued by the IESO require the Company to, among other things, comply with applicable reliability standards established by the North American Electric Reliability Corporation (NERC) and Northeast Power Coordinating Council, Inc. (NPCC). The costs associated with compliance with these reliability standards are expected to be recovered through rates, but there can be no assurance that the OEB will approve the recovery of all of such costs. Failure to obtain such approvals could have a material adverse effect on the Company.
There is the risk that new legislation, regulations, requirements or policies will be introduced in the future or that regulatory bodies may change or modify the regulations or rules that apply to the Company. These may reduce Hydro One’s revenue, or may require Hydro One to incur additional costs, which may or may not be recovered in future transmission and distribution rates.
Risk of Natural and Other Unexpected Occurrences
The Company’s facilities are exposed to the effects of severe weather conditions, natural disasters, man-made events including, but not limited to, cyber and physical terrorist type attacks, events which originate from third-party connected systems, and any other potentially catastrophic events. The Company’s facilities may not withstand occurrences of these types in all circumstances.
The Company could also be subject to claims for damages from events which may be proximately connected with the Company’s assets (for example, wildfires), claims for damages caused by its failure to transmit or distribute electricity, costs related to ensuring its continued ability to transmit or distribute electricity or costs related to information or cyber security.
The Company does not have insurance for damage to its transmission and distribution wires, poles and towers located outside its transmission and distribution stations resulting from these or other events. Where insurance is available for the Company’s other assets and for damage claims and cyber security claims, such insurance coverage may have deductibles, limits and/or
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
exclusions that may still expose the Company to material losses. Losses from lost revenues and repair costs could be substantial, especially for many of the Company’s facilities that are located in remote areas.
In the event that the Company is unable to recover such costs, this could have a material adverse effect on the Company.
Risk Associated with IT, Operational Technology (OT) Infrastructure, and Data Security
The Company’s ability to operate effectively in the Ontario electricity market is, in part, dependent upon it developing, modernizing, maintaining and managing complex IT and OT systems which are employed to operate and monitor its transmission and distribution facilities, financial and billing systems and other business systems. The Company’s increasing reliance on information systems and expanding data networks, as well as growing volume and complexity of data, increases its vulnerability, and exposure to information security threats. The Company’s transmission business is required to comply with various rules and standards for transmission reliability, including mandatory standards established by the NERC and the NPCC. These include standards relating to cyber-security and OT, which only apply to certain of the Company’s assets (generally being those whose failure could impact the functioning of the bulk electricity system). The Company may maintain different or lower levels of security for its assets that are not subject to these mandatory standards. The Company must also comply with various cyber-security and privacy-related regulatory requirements under the OEB’s Ontario Cyber Security Framework and legislative and licence requirements relating to the collection, use and disclosure of personal information and information regarding consumers, wholesalers, generators and retailers.
Cyber-attacks or unauthorized access to corporate IT and OT systems could result in service disruptions and system failures, which could have a material adverse effect on the Company, including as a result of a failure to provide electricity to customers. Because it operates critical infrastructure, Hydro One may be at greater risk of cyber-attacks from third parties (including state run or controlled parties) that could impair or incapacitate its assets. In addition, in the course of its operations, the Company collects, uses, processes and stores information which could be exposed in the event of a cyber-security incident or other unauthorized access or disclosure, such as information about customers, suppliers, counterparties, employees and other third parties.
Security and system disaster recovery controls are in place; however, there can be no assurance that there will not be system failures or security breaches or that such threats would be detected or mitigated on a timely basis. Upon occurrence and detection, the focus would shift from prevention to isolation, remediation and recovery until the incident has been fully addressed. Any such system failures or security breaches could have a material adverse effect on the Company.
Environment Risk
The Company is subject to extensive Canadian federal, provincial and municipal environmental regulation. Failure to comply could subject the Company to fines or other penalties. In addition, the presence or release of hazardous or other harmful substances could lead to claims by third parties or governmental orders requiring the Company to take specific actions such as investigating, controlling and remediating the effects of these substances. Although Hydro One is not a large emitter of greenhouse gases, the Company monitors its emissions to track and report on all sources, including sulphur hexafluoride or “SF6”. The Company could be subject to costs and other risks related to emissions. Contamination of the Company’s properties could limit its ability to sell or lease these assets in the future.
In addition, actual future environmental expenditures may vary materially from the estimates used in the calculation of the environmental liabilities provided for in the Company’s financial statements. The Company does not have insurance coverage for these environmental expenditures.
There is also risk associated with obtaining governmental approvals, permits, or renewals of existing approvals and permits related to constructing or operating facilities. This may require environmental assessment or result in the imposition of conditions, or both, which could result in delays and cost increases. Failure to obtain necessary approvals or permits could result in an inability to complete projects which may have a material adverse effect on the Company.
The Company’s facilities are exposed to the effects of severe weather conditions and natural disasters. The Company recognizes the risks associated with potential climate change and has developed plans to respond as appropriate. Climate change may have the effect of shifting weather patterns and increasing the severity and frequency of extreme weather events and natural disasters, which could impact Hydro One’s business. The Company’s facilities may not withstand occurrences of these types in all circumstances. Notwithstanding Hydro One’s efforts to adapt and increase grid resilience, the Company’s facilities are exposed to risks which may have an adverse effect on grid resilience. The Company could also be subject to claims for damages from events which may be proximately connected with the Company’s assets (for example, wildfires), claims for damages caused by its failure to transmit or distribute electricity or costs related to ensuring its continued ability to transmit or distribute electricity. The Company does not have insurance for damage to its transmission and distribution wires, poles and towers located outside its transmission and distribution stations resulting from these or other events. Where insurance is available for the Company’s other assets and for damage claims, such insurance coverage may have deductibles, limits and/or exclusions that may still expose the Company to material losses.

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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Losses from lost revenues and repair costs could be substantial, especially for many of the Company’s facilities that are located in remote areas.
In the event that the Company is unable to recover such costs, this could have a material adverse effect on the Company.
Labour Relations Risk
A substantial majority of the Company’s employees are unionized and are primarily represented by either the PWU or the Society. Over the past several years, significant effort has been expended to increase Hydro One’s flexibility to conduct operations in a more cost-efficient manner. Although the Company has achieved improved flexibility in its collective agreements, the Company may not be able to achieve further improvements, or at least not without increasing the risk of labour disruption. Hydro One Inc. reached a renewal collective agreement with the Society, covering the period from October 1, 2025 to March 31, 2028. Hydro One Inc. reached a renewal collective agreement with the PWU, covering the period from October 1, 2025 to March 31, 2028. Hydro One’s collective agreement with the CUSW covers the period from May 1, 2022 to April 30, 2026. Additionally, the EPSCA and a number of building trade unions have agreements, to which Hydro One is bound, covering the period from May 1, 2025 to April 30, 2030.
Future negotiations with unions present the risk of a labour disruption or dispute, risk to the Company’s ability to sustain the continued supply of electricity to customers, as well as potential risks to public safety and reputation. The Company also faces financial risks related to its ability to negotiate collective agreements consistent with its rate orders. Any of these could have a material adverse effect on the Company.
Risks Relating to Asset Condition, Capital Projects and Innovation
The Company continually incurs sustainment and development capital expenditures and monitors the condition of its assets to manage the risk of equipment failures and to determine the need for and timing of major refurbishments and replacements of its transmission and distribution infrastructure.
While traditionally a mature and stable industry, the electricity industry is facing rapid and dramatic technological change and increasing innovation, the consequences of which could have a material adverse effect on the Company, including a reduction in revenue.
Execution of the Company’s capital expenditure programs is partially dependent on external factors, such as OEB approvals; environmental approvals; municipal permits; equipment outage schedules that accommodate the IESO, generators and customers; other interrelated projects being on schedule; supply chain availability and/or cost and schedule variability for equipment suppliers, contracted services, and consulting services; and availability of contractor resources including in relation to workforce and equipment. Many of these external factors are beyond the Company’s control. There may also be a need for, among other things, Environmental Assessment Act (Ontario) approvals, approvals which require public meetings, appropriate engagement with Indigenous communities, OEB approvals of expropriation or early access to property, and other activities. Obtaining approvals and carrying out these processes may also be impacted by opposition to the proposed site of the capital investments. Delays in obtaining required approvals or failure to complete capital projects on a timely basis, or at all, could materially adversely affect transmission reliability or customers’ service quality or increase maintenance costs which could have a material adverse effect on the Company. Failure to receive approvals for projects when spending has already occurred would result in the inability of the Company to recover the investment in the project as well as forfeit the anticipated return on investment. The assets involved may be considered impaired and result in the write off of the value of the asset, negatively impacting net income. If the Company is unable to carry out capital expenditure plans in a timely manner, equipment performance may degrade, which may reduce network capacity, result in customer interruptions, compromise the reliability of the Company’s networks or increase the costs of operating and maintaining these assets. Any of these consequences could have a material adverse effect on the Company.
Increased competition for the development of large transmission projects and legislative changes relating to the selection of transmitters could impact the Company’s ability to expand its existing transmission system, which may have an adverse effect on the Company. The Company may not be selected to build new transmission as part of a competitive process. To the extent that other parties are selected to construct, own and operate new transmission assets, the Company’s share of Ontario’s transmission network would be reduced. Any delays in these new transmitters’ projects may impact the Company’s own projects that it is undertaking to in-service these new transmission assets.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Work Force Demographic Risk
By the end of 2025, approximately 9% of the Company’s employees who are members of the Company’s defined benefit and defined contribution pension plans were eligible for retirement, and by the end of 2026, approximately 11% could be eligible. These percentages are not evenly spread across the Company’s work force, but tend to be most significant in the most senior levels of the Company’s staff and among management staff. During 2025, approximately 4% of the Company’s work force (increased from 2% in 2024) elected to retire. Accordingly, the Company’s continued success will be tied to its ability to continue to attract and retain sufficient qualified staff to replace the capability lost through retirements and meet the demands of the Company’s work programs.
In addition, the Company expects the skilled labour market for its industry will remain highly competitive. Many of the Company’s current and potential employees are sought after as they possess skills and experience that are also highly coveted by other organizations inside and outside the electricity sector. The failure to attract, retain and deploy qualified personnel for Hydro One’s business could have a material adverse effect on the Company.
Risk Associated with Arranging Debt Financing
The Company expects to borrow to repay its existing indebtedness and to fund a portion of capital expenditures. Hydro One has substantial debt principal repayments coming due, including $925 million in 2026, $425 million in 2027 and $750 million in 2028. In addition, from time to time, the Company may draw on its syndicated bank credit facilities and/or issue short-term debt under Hydro One Inc.’s $2,300 million commercial paper program which would mature within one year of issuance. The Company also plans to incur continued material capital expenditures. Cash generated from operations, after the payment of expected dividends, will not be sufficient to fund the repayment of the Company’s existing indebtedness and capital expenditures. The Company’s ability to arrange sufficient and cost-effective debt financing could be materially adversely affected by numerous factors, including the regulatory environment in Ontario, the Company’s results of operations and financial position, market conditions, the ratings assigned to its debt securities by credit rating agencies, an inability of the Company to comply with its debt covenants, and general economic conditions (such as, among other things, changes in interest rates or international relations and geopolitical events that could cause weaker economic conditions or increase the volatility of the capital markets). A downgrade in the Company’s credit ratings could restrict the Company’s ability to access debt capital markets and increase the Company’s cost of debt. Any failure or inability on the Company’s part to borrow the required amounts of debt on satisfactory terms could impair its ability to repay maturing debt, fund capital expenditures and meet other obligations and requirements and, as a result, could have a material adverse effect on the Company. Increasing investor interest in ESG performance and reporting also has the potential to impact the cost and availability of the Company’s funding, as these factors may be increasingly connected to the quality of the Company’s ESG practices and related reporting, including reports addressing the allocation of funds and impact reporting under Hydro One’s Sustainable Financing Framework.
Market, Financial Instrument and Credit Risk
Market risk refers primarily to the risk of loss that results from changes in costs, foreign exchange rates and interest rates. The Company is exposed to fluctuations in interest rates as its regulated ROE is derived using a formulaic approach that takes into account anticipated interest rates. The Company issues debt from time to time to refinance maturing debt and for general corporate purposes. The Company is therefore exposed to fluctuations in interest rates in relation to such issuances of debt. Fluctuations in interest rates may also impact the funded position of Hydro One’s Defined Benefit Pension Plan, and associated pension asset or liability (see also “Pension Plan Risk”). The Company is not currently exposed to material foreign exchange risk.
The OEB-approved adjustment formula for calculating ROE in a deemed regulatory capital structure of 60% debt and 40% equity provides for increases and decreases depending on changes in benchmark interest rates for Government of Canada debt and the A-rated utility corporate bond yield spread. For the transmission and distribution businesses, during the Custom Incentive Rate period from 2023 to 2027, the OEB does not expect to address annual rate applications for updates to allowed ROE, so fluctuations will have no impact to net income. The Company has interest rate exposure in 2026 and beyond associated with the refinancing of maturing short- and long-term debt, as well as with debt issued for general corporate purposes and under the Sustainable Financing Framework which may include debt issued in relation to growth in rate base. The Company periodically uses interest rate swap agreements to mitigate elements of interest rate risk.
Financial assets create a risk that a counterparty will fail to discharge an obligation, causing a financial loss. Derivative financial instruments result in exposure to credit risk, since there is a risk of counterparty default. Hydro One monitors and minimizes credit risk through various techniques, including dealing with highly rated counterparties, limiting total exposure levels with individual counterparties, entering into agreements which enable net settlement, and monitoring the financial condition of counterparties. The Company does not trade in any energy derivatives. The Company is required to procure electricity on behalf of competitive electricity retailers and certain local distribution companies for resale to their customers. The resulting concentrations of credit risk are mitigated through the use of various security arrangements, including letters of credit, which are incorporated into the Company’s service agreements with these retailers in accordance with the OEB’s Retail Settlement Code.
The failure to properly manage these risks could have a material adverse effect on the Company.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Health and Safety Risk
Hydro One’s work environment can be inherently dangerous and there is a risk to health and safety of the public, our employees and contractors, as well as possible resultant operational and/or financial impacts. The Company is subject to federal and provincial legislation and regulations relating to health and safety. Findings of a failure to comply with these requirements could result in penalties and reputational risk, which could negatively impact the Company. Failure to comply could subject the Company to fines or other penalties. Any regulatory decision to disallow or limit the recovery of such costs could have a material adverse effect on the Company.
Pension Plan Risk
Hydro One has the Hydro One Defined Benefit Pension Plan in place for the majority of its employees. Contributions to the pension plan are established by actuarial valuations which are required to be filed with the Financial Services Regulatory Authority of Ontario on a triennial basis. The most recently filed valuation was prepared as at December 31, 2024, and was filed in September 2025, covering a three-year period from 2025 to 2027. The next required valuation will be prepared as at December 31, 2027 and is expected to be filed by no later than September 2028. Hydro One’s contributions to its pension plan satisfy, and are expected to continue to satisfy, minimum funding requirements. Contributions beyond 2027 will depend on the funded position of the plan, which is determined by investment returns, interest rates and changes in benefits and actuarial assumptions at that time. A determination by the OEB that some of the Company’s pension expenditures are not recoverable through rates could have a material adverse effect on the Company, and this risk may be exacerbated if the amount of required pension contributions increases.
Hydro One currently reports and recovers its pension costs on a cash basis, and maintains the accrual method with respect to OPEBs. Transitioning from the cash basis to an accrual method for pension costs may have material negative rate impacts for customers or material negative impacts on the Company should recovery of costs be disallowed by the OEB.
See also “Regulatory Risks and Risks Relating to Hydro One’s Revenues - Risk of Recoverability of Total Compensation Costs” for risks relating to recovery of pension costs.
Risk from Provincial Ownership of Transmission Corridors
The Province owns some of the corridor lands underlying the Company’s transmission system. Although the Company has the statutory right to use these transmission corridors, the Company may be limited in its options to expand or operate its systems. Also, other uses of the transmission corridors by third parties in conjunction with the operation of the Company’s systems, or adjacent land use by third parties, may increase safety or environmental risks, which could have a material adverse effect on the Company.
Litigation Risks
In the normal course of the Company’s operations, it becomes involved in, is named as a party to and is the subject of, various legal proceedings, including regulatory proceedings, tax proceedings and legal actions, relating to actual or alleged violations of law, common law damages claims, personal injuries, property damage, property taxes, land rights, the environment, contract disputes, claims by former employees and claims and proceedings by Indigenous groups. The outcome of outstanding, pending or future proceedings cannot be predicted with certainty and may be determined adversely to the Company, which could have a material adverse effect on the Company. Even if the Company prevails in any such legal proceeding, the proceedings could be costly and time-consuming and would divert the attention of management and key personnel from the Company’s business operations, which could adversely affect the Company.
Transmission Assets on Third-Party Lands Risk
Some of the lands on which the Company’s transmission assets are located are owned by third parties, including the Province and federal Crown, and are or may become subject to land claims by First Nations. The Company requires valid occupation rights to occupy such lands (which may take the form of land use permits, easements or otherwise). If the Company does not have valid occupational rights on third-party owned or controlled lands or has occupancy rights that are subject to expiry, it may incur material costs to obtain or renew such occupancy rights, or if such occupancy rights cannot be renewed or obtained it may incur material costs to remove and relocate its assets and restore the subject land. If the Company does not have valid occupancy rights and must incur costs as a result, this could have a material adverse effect on the Company or otherwise materially adversely impact the Company’s operations.
Reputational, Public Opinion and Political Risk
Reputation risk is the risk of negative publicity or the public’s negative perceptions towards Hydro One and the electricity industry that may result in a detrimental impact to Hydro One’s business, operations or financial condition leading to a deterioration of Hydro One’s reputation. Hydro One’s reputation and/or brand could be negatively impacted by changes in public opinion, attitudes towards the Company’s privatization, failure to deliver on its customer and/or stakeholder promises, failure to comply with mandatory reliability regulations established by the NERC and NPCC, failure to adequately respond to social issues raised by employees, partners and/stakeholders and other external forces. Adverse reputational events or political actions could have a material adverse effect on Hydro One’s business and prospects including, but not limited to, delays or denials of requisite
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
approvals, such as denial of requested rates, and accommodations for Hydro One’s planned projects, escalated costs, legal or regulatory action, and damage to stakeholder and community relationships. Any of these could have a material adverse impact on Hydro One and its business, financial condition and results of operations.
Risks Associated with Acquisitions
Acquisitions include inherent risks that some or all of the expected benefits may fail to materialize, or may not occur within the time periods anticipated, and Hydro One may incur material unexpected costs or liabilities. Realization of the anticipated benefits would depend, in part, on the Company’s ability to successfully integrate the acquired business, including the requirement to devote management attention and resources to integrating business practices and support functions. The failure to realize the anticipated benefits, the diversion of management’s attention, or any delays or difficulties encountered in connection with the integration could have an adverse effect on the Company’s business, results of operations, financial condition or cash flows.
Infectious Disease Risk
An outbreak of infectious disease, in the form of an epidemic, a pandemic, or a similar public health threat, could materially adversely impact the Company. The extent of any such adverse impact on the Company is uncertain, and may depend on the length and severity of any such infectious disease outbreak, any resultant government regulations, guidelines and actions, and any related adverse changes in general economic and market conditions. Such circumstances could impact, in particular: the Company’s operations and workforce, including security of supply, both with respect to availability and affordability, which individually or collectively may impact the Company's ability to complete operating and capital work programs as planned, including within scope and budget; certain financial obligations of the Company, including pension contributions and other post-retirement benefits, as a result of changes in prevailing market conditions; the Company’s expected revenues; reductions in overall electricity consumption and load, both short term and long term; overdue accounts and bad debt increases as a result of changes in the ability of the Company’s customers to pay; liquidity and the Company’s ability to raise capital; the Company’s ability to pay or increase dividends; the timing of increased rates; the Company’s ability to recover incremental costs and lost revenues linked to the outbreak; the Company’s ability to file regulatory filings on a timely basis; timing of regulatory decisions and the impacts those decisions may have on the Company or its ability to implement them; and customer and stakeholder needs and expectations.
The Company also faces risks and costs associated with implementation of business continuity plans and modified work conditions, including the risks and costs associated with maintaining or reducing its workforce, making the required resources available to its workforce to enable essential work, including remotely where possible, and to keep its workforce healthy, as well as risks and costs associated with recovery of normal operations. Furthermore, the Company is dependent on third party providers for certain activities, and relies on a strong international supply chain. Any significant disruption to those providers or the supply chain resulting from an outbreak of infectious disease could materially adversely impact the Company.
Risks Relating to the Common Shares of Hydro One Limited
Hydro One’s common shares trade on the TSX. The trading price of the common shares has in the past been, and may in the future be, subject to significant fluctuations. These fluctuations may be caused by events or factors related or unrelated to Hydro One’s operating performance and/or beyond its control, including: the risk factors described herein; general economic conditions within Ontario and Canada and globally, including changes in interest rates; inflation; the potential imposition of duties, tariffs or trade restrictions; changes in electricity prices; changes in electricity demand; weather conditions; actual or anticipated fluctuations in Hydro One’s quarterly and annual results and the results of public companies similar to Hydro One; Hydro One’s businesses, operations, results and prospects; Hydro One’s reputation and its relationship with the Province; the timing and amount of dividends, if any, declared on the common shares; future issuances of common shares or other securities by Hydro One or Hydro One Inc.; Hydro One’s relationship with its regulator; changes in government regulation, taxes, legal proceedings or other developments; shortfalls in Hydro One’s operating results from levels forecasted by securities analysts; investor sentiment toward energy companies in general or companies adopting ESG performance and reporting practices and the achievement by companies of ESG targets; maintenance of acceptable credit ratings or credit quality; and the general state of the securities markets. These and other factors may impair the development or sustainability of a liquid market for the common shares and the ability of investors to sell common shares at an attractive price.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Risks Relating to the Company’s Relationship with the Province
Ownership and Continued Influence by the Province and Voting Power; Share Ownership Restrictions
The Province currently owns approximately 47.1% of the outstanding common shares of Hydro One. The Electricity Act restricts the Province from selling voting securities of Hydro One (including common shares) of any class or series if it would own less than 40% of the outstanding number of voting securities of that class or series after the sale and in certain circumstances also requires the Province to take steps to maintain that level of ownership. Accordingly, the Province is expected to continue to maintain a significant ownership interest in voting securities of Hydro One for an indefinite period.
As a result of its significant ownership of the common shares of Hydro One, the Province has, and is expected indefinitely to have, the ability to determine or significantly influence the outcome of shareholder votes, subject to the restrictions in the Governance Agreement between Hydro One and the Province dated November 5, 2015 (Governance Agreement) (available on SEDAR+ at www.sedarplus.com). Despite the terms of the Governance Agreement in which the Province has agreed to engage in the business and affairs of the Company as an investor and not as a manager, there is a risk that the Province’s engagement in the business and affairs of the Company as an investor will be informed by its policy objectives and may influence the conduct of the business and affairs of the Company in ways that may not be aligned with the interests of other investors. Notwithstanding the Governance Agreement, and in light of actions historically taken by the Province, there can be no assurance that the Province will not take other actions in the future that could be detrimental to the interests of investors in Hydro One. See “Risks Relating to Government Action” above.
The share ownership restrictions in the Electricity Act (Share Ownership Restrictions) and the Province’s significant ownership of common shares of Hydro One together effectively prohibit one or more persons acting together from acquiring control of Hydro One. They also may limit or discourage transactions involving other fundamental changes to Hydro One and the ability of other shareholders to successfully contest the election of the directors proposed for election pursuant to the Governance Agreement. The Share Ownership Restrictions may also discourage trading in, and may limit the market for, the common shares and other voting securities.
Nomination of Directors and Confirmation of Chief Executive Officer (CEO) and Chair
Although director nominees (other than the CEO) are required to be independent of both the Company and the Province pursuant to the Governance Agreement, there is a risk that the Province will nominate or confirm individuals who satisfy the independence requirements but who it considers are disposed to support and advance its policy objectives and give disproportionate weight to the Province’s interests in exercising their business judgment and balancing the interests of the stakeholders of Hydro One. This, combined with the fact certain matters require a two-thirds vote of the Board, could allow the Province to unduly influence certain Board actions such as confirmation of the Chair and confirmation of the CEO.
Board Removal Rights
Under the Governance Agreement, the Province has the right to withhold from voting in favour of all director nominees and has the right to seek to remove and replace the entire Board, including in each case its own director nominees but excluding the CEO and, at the Province’s discretion, the Chair. In exercising these rights in any particular circumstance, the Province is entitled to vote in its sole interest, which may not be aligned with the interests of other stakeholders of Hydro One.
More Extensive Regulation
Although under the Governance Agreement, the Province has agreed to engage in the business and affairs of Hydro One as an investor and not as a manager and has stated that its intention is to achieve its policy objectives through legislation and regulation as it would with respect to any other utility operating in Ontario, there is a risk that the Province will exercise its legislative and regulatory power to achieve policy objectives in a manner that has a material adverse effect on the Company. See “Risks Relating to Government Action” above.
Prohibitions on Selling the Company’s Transmission or Distribution Business
The Electricity Act prohibits the Company from selling all or substantially all of the business, property or assets related to its transmission system or distribution system that is regulated by the OEB. There is a risk that these prohibitions may limit the ability of the Company to engage in sale transactions involving a substantial portion of either system, even where such a transaction may otherwise be considered to provide substantial benefits to the Company and the holders of the common shares.
Future Sales of Common Shares by the Province
Although the Province has indicated that it does not intend to sell further common shares of Hydro One, the registration rights agreement between Hydro One and the Province dated November 5, 2015 (available on SEDAR+ at www.sedarplus.com) grants the Province the right to request that Hydro One file one or more prospectuses and take other procedural steps to facilitate secondary offerings by the Province of the common shares of Hydro One. Future sales of common shares of Hydro One by the Province, or the perception that such sales could occur, may materially adversely affect market prices for these common shares and impede Hydro One’s ability to raise capital through the issuance of additional common shares, including the number of common shares that Hydro One may be able to sell at a particular time or the total proceeds that may be realized.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Limitations on Enforcing the Governance Agreement
The Governance Agreement includes commitments by the Province restricting the exercise of its rights as a holder of voting securities, including with respect to the maximum number of directors that the Province may nominate and on how the Province will vote with respect to other director nominees. Hydro One’s ability to obtain an effective remedy against the Province, if the Province were not to comply with these commitments, is limited as a result of the Proceedings Against the Crown Act (Ontario). This legislation provides that the remedies of injunction and specific performance are not available against the Province, although a court may make an order declaratory of the rights of the parties, which may influence the Province’s actions. A remedy of damages would be available to Hydro One, but damages may not be an effective remedy, depending on the nature of the Province’s non-compliance with the Governance Agreement.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of Hydro One Consolidated Financial Statements requires the Company to make key estimates and critical judgments that affect the reported amounts of assets, liabilities, revenues and costs, and related disclosures of contingencies. Hydro One bases its estimates and judgments on historical experience, current conditions and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities, as well as identifying and assessing the Company’s accounting treatment with respect to commitments and contingencies. Actual results may differ from these estimates and judgments. Hydro One has identified the following critical accounting estimates and judgments used in the preparation of its Consolidated Financial Statements:
Revenues
Distribution revenues attributable to the delivery of electricity are based on OEB-approved distribution rates and are recognized on an accrual basis and include billed and unbilled revenues. Billed revenues are based on the amount of electricity delivered as measured from customer meters. At the end of each month, the amount of electricity delivered to customers since the date of the last billed meter reading is estimated, and the corresponding unbilled revenue is recorded. The unbilled revenue estimate is affected by energy consumption and changes in the composition of customer classes.
Regulatory Assets and Liabilities
Hydro One’s regulatory assets represent certain amounts receivable from electricity customers in a future period and costs that have been deferred for accounting purposes because it is probable that they will be recovered in future rates. In addition, the Company has recorded regulatory liabilities that generally represent amounts that are refundable to electricity customers in future rates. The regulatory assets mainly include amounts related to the deferred income taxes, post-retirement and post-employment non-service costs, costs related to designated broadband projects, environmental liabilities and share-based compensation costs. The Company’s regulatory liabilities pertain primarily to deferral and variance accounts, and include amounts related to the pension benefit liability. The regulatory assets and liabilities can be recognized for rate-setting and financial reporting purposes only if the amounts have been approved for inclusion in the electricity rates by the OEB, or if such approval is judged to be probable by management. The Company continually assesses the likelihood of recovery of each of its regulatory assets and continues to believe that it is probable that the OEB will include its regulatory assets and regulatory liabilities in setting future rates. If, at some future date, the Company judges that it is no longer probable that the OEB will include a regulatory asset or regulatory liability in setting future rates, the respective carrying amount would be reflected in results of operations, prospectively from the date the Company’s assessment is made.
Employee Future Benefits
Hydro One’s employee future benefits consist of pension and post-retirement and post-employment plans, and include pension, group life insurance, health care, and long-term disability benefits provided to the Company’s current and retired employees. Employee future benefits costs are included in Hydro One’s labour costs that are either charged to results of operations or capitalized as part of the cost of property, plant and equipment and intangible assets. Changes in assumptions affect the benefit obligation of the employee future benefits and the amounts that will be charged to results of operations or capitalized in future years. The following significant assumptions and estimates are used to determine employee future benefit costs and obligations:
Weighted Average Discount Rate
The weighted average discount rate used to calculate the employee future benefits obligation is determined at each year end by referring to the most recently available market interest rates based on “AA”-rated corporate bond yields reflecting the duration of the applicable employee future benefit plan. The discount rate as at December 31, 2025 increased to 5.02% (2024 - 4.73%) for pension benefits and increased to 5.05% (2024 - 4.75%) for the post-retirement and post-employment plans. The increase in the discount rate has resulted in a corresponding decrease in employee future benefits liabilities for the pension, post-retirement and post-employment plans for accounting purposes. The liabilities are determined by independent actuaries using the projected benefit method prorated on service and based on assumptions that reflect management’s best estimates.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Expected Rate of Return on Plan Assets
The expected long-term rate of return on pension plan assets is 7.20% for the year ended December 31, 2025 (2024 - 7.00%). This rate is based on the long-term return expectations at the beginning of 2025 and reflects the pension plan target asset mix set out in the Statement of Investment Policies and Procedures dated August 13, 2024.
Rates of return on the respective portfolios are determined with reference to respective published market indices. The expected rate of return on pension plan assets reflects the Company’s long-term expectations. The Company believes that this assumption is reasonable because, with the pension plan’s balanced investment approach, the higher volatility of equity investment returns is intended to be offset by the greater stability of fixed-income and short-term investment returns. The net result, on a long-term basis, is a lower return than might be expected by investing in equities alone. In the short term, the pension plan can experience fluctuations in actual rates of return.
Rate of Cost of Living Increase
The rate of cost of living increase is determined by considering differences between long-term Government of Canada nominal bonds and real return bonds, which increased from 1.81% per annum as at December 31, 2024 to approximately 1.89% per annum as at December 31, 2025. Based on the Bank of Canada’s commitment to keep long-term inflation between 1.00% and 3.00%, in addition to current and anticipated trends, management believes that a long-term assumption of 2.00% per annum is reasonable for employee future benefits liability valuation purposes as at December 31, 2025 (2024 - 2.00%).
Salary Increase Assumptions
Salary increases should reflect general wage increases plus an allowance for merit and promotional increases for current members of the Plan and should be consistent with the assumptions for consumer price inflation and real wage growth in the economy. The merit and promotion scale was developed based on the salary increase assumption review performed in 2025. The review considered actual salary experience from 2019 to 2024 using valuation data for all active employees with defined benefit pension entitlements (split by age and service) and Hydro One’s expectation of future salary increases. Additionally, the salary scale reflects negotiated salary increases over the contract period.
Mortality Assumptions
The Company’s employee future benefits liability is also impacted by changes in life expectancies used in mortality assumptions. Increases in life expectancies of plan members result in increases in the employee future benefits liability. For the pension and post-retirement plans, the mortality assumption used as at December 31, 2025 is 90% of the 2014 Canadian Pensioners Mortality Private Sector table, projected generationally using an updated mortality improvement scale from the Mortality Improvements Research report, that was published by the Canadian Institute of Actuaries in April 2024 (scale “MI-2024”). The assumption at December 31, 2024 used mortality improvement Scale CPM-B. The multiplier applied to the assumed mortality table is based on the result of a mortality experience study that was conducted in 2021. For the post-employment plan, the mortality assumption used as at December 31, 2025 is the disability mortality table from the 2009 to 2015 Canadian Institute of Actuaries Group Long Term Disability Termination Study, which is the most recent publicly available table that reflects Canadian experience and is commonly used by Canadian plan sponsors.
Rate of Increase in Health Care Cost Trends
The costs of post-retirement and post-employment benefits are determined at the beginning of the year and are based on assumptions for expected claims experience and future health care cost inflation. For the post-retirement benefit plans, a study of Hydro One’s historical per capita health care cost trend experience was conducted in 2017. The health and dental trends reflect the results of this study as well as macroeconomic inputs such as the expected long-term rates of general inflation and real GDP growth. The environment of high general inflation that was present in Canada in 2022 and 2023 resulted in short-term upward pressure on the cost of certain medical services covered by Hydro One's post-retirement and post-employment benefit plans. However, these effects were muted somewhat by plan design and government regulation. These effects in 2023 as well as any residual effects that have occurred in 2024 and 2025 have been captured though the use of actual claims experience from 2023, 2024 and year-to-date 2025 (through November 30) in the development of the per capita claims cost assumptions being used for the December 31, 2025 disclosures. Based on the above, Hydro One is not making any changes to its health care trend rate assumptions for the December 31, 2025 disclosures from what was used at December 31, 2024.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING
Disclosure controls and procedures are the processes designed to ensure that information is recorded, processed, summarized and reported on a timely basis to the Company’s management, including its CEO and Chief Financial and Regulatory Officer (CFRO), as appropriate, to make timely decisions regarding required disclosure in the MD&A and consolidated financial statements. At the direction of the Company’s CEO and CFRO, management evaluated disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, management concluded that the Company’s disclosure controls and procedures were effective as at December 31, 2025.
Internal control over financial reporting is designed by, or under the direction of the CEO and CFRO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP. The Company’s internal control over financial reporting framework includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S. GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.
The Company’s management, at the direction of the CEO and CFRO, evaluated the effectiveness of the design and operation of internal control over financial reporting based on the criteria established in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as at December 31, 2025.
Internal controls, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and due to its inherent limitations, may not prevent or detect all misrepresentations. Furthermore, the effectiveness of internal control is affected by change and subject to the risk that internal control effectiveness may change over time.
There were no changes in the design of the Company’s internal control over financial reporting during the three months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the operation of the Company’s internal control over financial reporting.
Management will continue to monitor its systems of internal control over reporting and disclosure and may make modifications from time to time as considered necessary.
NEW ACCOUNTING PRONOUNCEMENTS
The following table presents Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) that are applicable to Hydro One:
Recently Adopted Accounting Guidance
GuidanceDate issued
Description
ASU Effective DateImpact on Hydro One
ASU 2024-02March 2024The amendments contain modifications to the codification that remove various concept statements which may be extraneous and not required to understand or apply the guidance or references used in prior statements to provide guidance in certain topical areas.Fiscal years beginning after December 15, 2024.No impact upon adoption
ASU 2023-09December 2023The amendments address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.Annual periods beginning after December 15, 2024.Adoption of the standard does not materially affect Hydro One’s income tax disclosures.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Recently Issued Accounting Guidance Not Yet Adopted
GuidanceDate issuedDescriptionASU Effective DateImpact on Hydro One
ASU 2023-06October 2023The amendments represent changes to clarify or improve disclosure or presentation requirements of a variety of subtopics in the FASB Codification. Many of the amendments allow users to more easily compare entities subject to the U.S. Securities and Exchange’s (SEC) existing disclosures with those entities that were not previously subject to the SEC’s requirements. Also, the amendments align the requirements in the Codification with the SEC’s regulations.

Applicable to all entities, if by June 30, 2027 the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.		Two years subsequent to the date on which the SEC’s removal of that related disclosure becomes effective.Under assessment
ASU
2024-03		November 2024The amendments require public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods, which are not generally presented in the current financial statements.Annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Under assessment
ASU 2025-03May 2025The amendments require entities to apply the guidance for identifying the accounting acquirer in transactions where a business that qualifies as a Variable Interest Entity is acquired through the exchange of equity interests.Annual and interim periods beginning after December 15, 2026.No impact upon adoption
ASU 2025-05July 2025The amendments allow all entities to use a practical expedient when estimating expected credit losses for current accounts receivable and contract assets under Topic 606, by assuming that current conditions as of the balance sheet date remain unchanged over the asset’s life. Additionally, entities other than public business entities that elect this expedient may adopt an accounting policy to consider post–balance sheet date collection activity in their credit loss estimates.Annual and interim periods beginning after December 15, 2025.No impact upon adoption
ASU 2025-06September 2025The amendments modernize accounting for internal-use software by removing outdated development stage references and introducing a capitalization threshold based on management authorization and project completion probability. Annual periods beginning after December 15, 2027.Under assessment
ASU 2025-09November 2025The amendments expand hedge-accounting eligibility and better align the guidance with common risk‑management practices. Key updates allow grouping forecasted transactions with similar exposure, simplify hedging of choose‑your‑rate variable‑rate debt, and broaden eligibility for hedging nonfinancial components. The guidance modernizes treatment of certain option‑based derivatives and resolves mismatches in dual hedge relationships. Annual and interim periods beginning after December 15, 2026.Under assessment
ASU 2025-10December 2025The amendments establish authoritative GAAP for government grants, setting recognition, measurement, presentation, and disclosure requirements. Annual and interim periods beginning after December 15, 2028.Under assessment
ASU 2025-11December 2025The amendments clarify interim reporting by establishing a complete list of required GAAP interim disclosures. They introduce a disclosure principle requiring entities to report material events occurring after the annual reporting period. The Update also clarifies types of interim reports and the form and content of interim financial statements. Overall, the changes enhance clarity and consistency without altering existing disclosure requirements.Interim reporting periods within annual reporting periods beginning after December 15, 2027.Under assessment
ASU 2025-12December 2025The amendments clarify existing guidance, correct errors, and introduce minor improvements to numerous Codification Topics, thereby making the requirements easier for entities to understand and apply.Annual and interim periods beginning after December 15, 2026.Under assessment
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
SUMMARY OF FOURTH QUARTER RESULTS OF OPERATIONS
Three months ended December 31 (millions of dollars, except EPS)
20252024Change
Revenues
    Transmission491 505 (2.8%)
    Distribution1,757 1,583 11.0%
    Other20 7 185.7%
2,268 2,095 8.3%
Costs
Purchased power1,287 1,060 21.4%
OM&A
    Transmission80 128 (37.5%)
    Distribution153 204 (25.0%)
    Other25 41 (39.0%)
258 373 (30.8%)
Depreciation, amortization and asset removal costs287 286 0.3%
1,832 1,719 6.6%
Income before financing charges, equity income and income tax expense436 376 16.0%
Financing charges175 158 10.8%
Equity income3 — —%
Income before income tax expense264 218 21.1%
Income tax expense30 17 76.5%
Net income234 201 16.4%
Net income attributable to common shareholders of Hydro One233 200 16.5%
Basic EPS$0.39$0.3318.2%
Diluted EPS$0.39$0.3318.2%
Assets Placed In-Service
    Transmission953 754 26.4%
    Distribution351 342 2.6%
    Other6 4 50.0%
1,310 1,100 19.1%
Capital Investments
    Transmission629 476 32.1%
    Distribution303 313 (3.2%)
    Other7 10 (30.0%)
939 799 17.5%










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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Net Income
Net income attributable to common shareholders for the quarter ended December 31, 2025 of $233 million is $33 million, or 16.5%, higher than the same period in the prior year, primarily due to:
•lower OM&A costs primarily resulting from lower corporate support costs; partially offset by
•lower revenues, net of purchased power,8 resulting from regulatory adjustments, primarily due to higher earnings sharing in the current period, partially offset by higher revenues resulting from higher average monthly peak demand and energy consumption, as well as increased transmission and distribution revenues due to OEB-approved 2025 rates;
•higher financing charges attributable to an increase in outstanding long-term debt, partially offset by higher capitalized interest; and
•higher income tax expense primarily resulting from higher pre-tax earnings.
EPS
Basic EPS was $0.39 in the fourth quarter of 2025, compared to Basic EPS of $0.33 in the fourth quarter of 2024.
Revenues
The year-over-year decrease of $14 million, or 2.8%, in transmission revenues during the quarter primarily resulted from:
•regulatory adjustments, including a higher earnings sharing accrual in the current period; partially offset by
•higher average monthly peak demand; and
•higher revenues resulting from OEB-approved 2025 rates.
The year-over-year increase of $174 million, or 11.0%, in distribution revenues during the quarter primarily resulted from:
•higher purchased power costs, which are fully recovered from ratepayers and thus net income neutral;
•higher revenues resulting from OEB-approved 2025 rates; and
•higher energy consumption; partially offset by
•regulatory adjustments, mainly attributable to a higher earnings sharing accrual in the current period; and
•lower revenue associated with mutual storm assistance costs recovered from third parties in the prior year, which is offset in OM&A and therefore net income neutral.
Distribution revenues, net of purchased power,8 decreased by 10.1% during the fourth quarter of 2025 compared to the prior year primarily due to:
•regulatory adjustments, including a higher earnings sharing accrual in the current period; and
•lower revenue associated with mutual storm assistance costs recovered from third parties, which is offset in OM&A and therefore net income neutral; partially offset by
•higher revenues resulting from OEB-approved 2025 rates; and
•higher energy consumption.
OM&A Costs
The year-over-year decrease of $48 million, or 37.5%, in transmission OM&A costs during the quarter was primarily due to:
•severance costs in the prior year;
•lower corporate support costs; and
•lower work program expenditures, including work related to facilities maintenance and vegetation management.
The year-over-year decrease of $51 million, or 25.0%, in distribution OM&A costs during the quarter was primarily due to:
•severance costs in the prior year;
•net income neutral items, including mutual storm assistance costs and lower fuel costs of Hydro One Remotes, both of which are offset in revenue; and
•lower corporate support costs; partially offset by
•higher work program expenditures, including emergency restoration and vegetation management.
The year-over-year decrease of $16 million, or 39.0%, in other OM&A costs during the quarter was due to various factors, including lower costs in Acronym primarily due to higher third party service costs in the prior year.
Depreciation, Amortization and Asset Removal Costs
Depreciation, amortization and asset removal costs for the fourth quarter of 2025 were comparable to the same period in 2024.
8 See section “Non-GAAP Financial Measures”.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
Financing Charges
The $17 million, or 10.8%, increase in financing charges for the quarter ended December 31, 2025, was primarily due to an increase in outstanding long-term debt, partially offset by higher capitalized interest.
Income Tax Expense
Income tax expense for the fourth quarter of 2025 increased by $13 million compared to the same period in 2024. This resulted in a realized ETR of approximately 11.4% in the fourth quarter of 2025, compared to approximately 7.8% in the fourth quarter of the prior year.
The increase in ETR for the three months ended December 31, 2025 was primarily attributable to:
•higher pre-tax earnings; and
•lower deductible timing differences compared to the prior year.
Assets Placed In-Service
The increase in transmission assets placed in-service during the fourth quarter was primarily due to:
•timing of assets placed in-service for station refurbishments and replacements, including the Bruce A Transmission station, the Merivale Transmission Station, and the Lauzon Transmission Station; and
•investments placed in-service for customer connection projects; partially offset by
•investments placed in-service for the Chatham to Lakeshore Transmission Line; and
•lower volume of line refurbishments and wood pole replacements.
The increase in distribution assets placed in-service during the fourth quarter was primarily due to:
•investments placed in-service for Ontario’s broadband initiative;
•assets placed in-service for the AMI 2.0 system; and
•higher volume of assets placed in-service for customer connections; partially offset by
•lower volume of wood pole replacements and line refurbishments;
•timing of assets placed in-service for system capability reinforcement projects; and
•assets placed in-service for the Orleans Operation Centre in the prior year.
Capital Investments
The increase in transmission capital investments during the fourth quarter was primarily due to:
•higher investments in the Waasigan Transmission Line Project;
•investments in the St. Clair Transmission Line Project;
•higher spend on major development projects; and
•higher spend on customer connections; partially offset by
•lower volume of line refurbishments and wood pole replacements.
The decrease in distribution capital investments during the fourth quarter was primarily due to:
•lower volume of wood pole replacements;
•investments in the Orillia Distribution Warehouse, Orillia Operation Centre, and Orleans Operation Centre; and
•lower volume of PCB transformer replacements; partially offset by
•investments in Ontario’s broadband initiative; and
•investments in the AMI 2.0 system.
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
HOHL - CONSOLIDATING SUMMARY FINANCIAL INFORMATION
Hydro One Limited fully and unconditionally guarantees the payment obligations of its wholly-owned subsidiary, HOHL, issuable under the short form base shelf prospectus dated November 29, 2024. Accordingly, the following consolidating summary financial information is provided in compliance with the requirements of section 13.4 of National Instrument 51-102 - Continuous Disclosure Obligations providing for an exemption for certain credit support issuers. The tables below contain consolidating summary financial information as at and for the years ended December 31, 2025 and December 31, 2024 for: (i) Hydro One Limited; (ii) HOHL; (iii) the subsidiaries of Hydro One Limited, other than HOHL, on a combined basis; (iv) consolidating adjustments; and (v) Hydro One Limited and all of its subsidiaries on a consolidated basis, in each case for the periods indicated. Such summary financial information is intended to provide investors with meaningful and comparable financial information about Hydro One Limited and its subsidiaries. This summary financial information should be read in conjunction with Hydro One Limited's most recently issued annual and interim financial statements. This summary financial information has been prepared in accordance with U.S. GAAP, as issued by the FASB.
Year ended December 31
(millions of dollars)
Hydro One LimitedHOHLSubsidiaries of
Hydro One Limited,
other than HOHL		Consolidating AdjustmentsTotal Consolidated
Amounts of Hydro
One Limited
2025202420252024202520242025202420252024
Revenue794 757 — — 10,115 9,462 (1,868)(1,735)9,041 8,484 
Net Income (Loss) Attributable to Common Shareholders825 777 — — 2,248 1,978 (1,734)(1,599)1,339 1,156 
As at December 31
(millions of dollars)
Hydro One LimitedHOHLSubsidiaries of
Hydro One Limited,
other than HOHL		Consolidating
Adjustments		Total Consolidated
Amounts of Hydro
One Limited
2025202420252024202520242025202420252024
Current Assets940 953 — — 4,172 4,229 (2,938)(3,065)2,174 2,117 
Non-Current Assets3,295 3,226 — — 59,529 54,743 (25,327)(23,404)37,497 34,565 
Current Liabilities1,075 1,061 — — 5,420 5,468 (2,905)(3,028)3,590 3,501 
Non-Current Liabilities425 425 — — 40,475 36,291 (17,565)(15,708)23,335 21,008 
FORWARD-LOOKING STATEMENTS AND INFORMATION
The Company’s oral and written public communications, including this document, often contain “forward-looking information” within the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of applicable U.S. securities laws (collectively, “forward-looking information”). Statements containing forward-looking information are made pursuant to the “safe harbour” provisions of applicable Canadian and U.S. securities laws. Forward-looking information in this document is based on current expectations, estimates, forecasts and projections about the Company’s business, the industry, regulatory and economic environments in which it operates, and includes beliefs and assumptions made by the management of the Company. Such statements include, but are not limited to, statements regarding: the Company’s corporate strategy; the Company’s transmission and distribution rate and revenue requirement applications including the JRAP and its proposed investment plan, resulting and related decisions as well as resulting rates, recovery and expected impacts and timing; expectations about the Company’s liquidity and capital resources and operational requirements; sustainability goals; the Operating Credit Facilities; expectations regarding the Company’s financing activities; the Company’s maturing debt; expectations and impact of the Company’s credit ratings; the Company’s ongoing and planned projects, initiatives and expected capital investments, including expected approvals, results, costs, funding sources and in-service and completion dates; expectations regarding the Company’s Z-Factor application and impacts of its outcome; contractual obligations and other commercial commitments; the BBFA, as well as related regulations, and expected impacts; expectations regarding the Ministry’s subsidies program to ISPs and its results and expected timeline; the Company’s assessment of recovery and impacts related to the OEB-established generic variance and deferral accounts; expected impacts and results of the OEB’s new cost of capital parameters; future pension plan contributions, including estimates of total Company pension contributions; the expected advancement and construction of various transmission stations and transmission lines in connection with the Province’s first integrated energy plan and the target in-service dates; collective agreements and bargaining; Protect Ontario by Unleashing our Economy Act and expected impacts; the Company’s expectations regarding participation in the TSF Registry and expected engagement with IESO and industry and the government decision on potential competitive procurement projects; dividends; non-GAAP financial measures; internal controls over financial reporting and disclosure; the MTN Program, including the expected filing of a new MTN Program prospectus; and accounting-related guidance and expected impacts. Words such as “expect,” “anticipate,” “intend,” “attempt,” “may,” “plan,” “will,” “would,” “believe,” “seek,” “estimate,” “goal,” “aim,” “target,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. Therefore,
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
actual outcomes and results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Hydro One does not intend, and it disclaims any obligation, to update any forward-looking statements, except as required by law.
These forward-looking statements are based on a variety of factors and assumptions including, but not limited to, the following: no unforeseen changes in the legislative and operating framework for Ontario’s electricity market or for Hydro One specifically; favourable decisions from the OEB and other regulatory bodies concerning outstanding and future rate and other applications; no unexpected delays in obtaining required regulatory approvals; no unforeseen changes in rate orders or rate setting methodologies for the Company’s distribution and transmission businesses; no unfavourable changes in environmental regulation; continued use of U.S. GAAP; a stable regulatory environment; no significant changes to the Company's current credit ratings; no unforeseen impacts of new accounting pronouncements; no changes to expectations regarding electricity consumption; no unforeseen changes to economic and market conditions; completion of operating and capital projects that have been deferred; and no significant event occurring outside the ordinary course of business. These assumptions are based on information currently available to the Company, including information obtained from third-party sources. Actual results may differ materially from those predicted by such forward-looking statements. While Hydro One does not know what impact any of these differences may have, the Company’s business, results of operations, financial condition and credit stability may be materially adversely affected if any such differences occur. Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking statements include, among other things:
•regulatory risks and risks relating to Hydro One’s revenues, including risks relating to actual performance against forecasts, competition with other transmitters and other applications to the OEB, the rate-setting models for transmission and distribution, the recoverability of capital expenditures, obtaining rate orders or recoverability of total compensation costs;
•risks associated with the Province’s share ownership of Hydro One and other relationships with the Province, including potential conflicts of interest that may arise between Hydro One, the Province and related parties, risks associated with the Province’s exercise of further legislative and regulatory powers, risks relating to the ability of the Company to attract and retain qualified executive talent or the risk of a credit rating downgrade for the Company and its impact on the Company’s funding and liquidity;
•risks relating to the location of the Company’s assets on Reserve lands, that the Company’s operations and activities may give rise to the Crown’s duty to consult and potentially accommodate Indigenous communities, and the risk that Hydro One may incur significant costs associated with transferring assets located on Reserves;
•the risk that the Company may be unable to comply with regulatory and legislative requirements or that the Company may incur additional costs for compliance that are not recoverable through rates;
•the risk of exposure of the Company’s facilities to the effects of severe weather conditions, natural disasters, man-made events or other unexpected occurrences for which the Company is uninsured or for which the Company could be subject to claims for damage;
•risks associated with information system security and maintaining complex information technology and OT system infrastructure, including system failures or risks of cyber-attacks or unauthorized access to corporate information technology and OT systems;
•the risk of non-compliance with environmental regulations and inability to recover environmental expenditures in rate applications and the risk that assumptions that form the basis of the Company’s recorded environmental liabilities and related regulatory assets may change;
•the risk of labour disputes and inability to negotiate or renew appropriate collective agreements on acceptable terms consistent with the Company’s rate decisions;
•the risk that the Company may not be able to execute plans for capital projects necessary to maintain the performance of the Company’s assets or to carry out projects in a timely manner or the risk of increased competition for the development of large transmission projects or legislative changes affecting the selection of transmitters;
•risks associated with asset condition, capital projects and innovation, including public opposition to or delays or denials of the requisite approvals and accommodations for the Company’s planned projects;
•risks related to the Company’s work force demographic and its potential inability to attract and retain qualified personnel;
•the risk that the Company is not able to arrange sufficient cost-effective financing to repay maturing debt and to fund capital expenditures, the risk of a downgrade in the Company’s credit ratings or risks associated with investor interest in ESG performance and reporting;
•risks associated with fluctuations in interest rates and failure to manage exposure to credit and financial instrument risk;
•risks associated with economic uncertainty and financial market volatility;
•the risk of failure to mitigate significant health and safety risks;
•the risk of not being able to recover the Company’s pension expenditures in future rates and uncertainty regarding the future regulatory treatment of pension, other post-employment benefits and post-retirement benefits costs;
•the impact of the ownership by the Province of lands underlying the Company’s transmission system;
•the risk associated with legal proceedings that could be costly, time-consuming or divert the attention of management and key personnel from the Company’s business operations;
•the impact if the Company does not have valid occupational rights on third-party owned or controlled lands and the risks associated with occupational rights of the Company that may be subject to expiry;
•risks relating to adverse reputational events or political actions relating to Hydro One and the electricity industry;
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HYDRO ONE LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
For the years ended December 31, 2025 and 2024
•the potential that Hydro One may incur significant expenses to replace functions currently outsourced if agreements are terminated or expire before a new service provider is selected;
•risks relating to acquisitions, including the failure to realize the anticipated benefits of such transactions at all, or within the time periods anticipated, and unexpected costs incurred in relation thereto;
•risks relating to an outbreak of infectious disease;
•the inability to continue to prepare financial statements using U.S. GAAP; and
•the risk related to the impact of any new accounting pronouncements.
Hydro One cautions the reader that the above list of factors is not exhaustive. Some of these and other factors are discussed in more detail in the section entitled “Risk Management and Risk Factors” in this MD&A.
In addition, Hydro One cautions the reader that information provided in this MD&A regarding the Company’s outlook on certain matters, including potential future investments, is provided in order to give context to the nature of some of the Company’s future plans and may not be appropriate for other purposes.
Additional information about Hydro One, including the Company’s Annual Information Form, is available on SEDAR+ at www.sedarplus.com, the U.S. Securities and Exchange Commission’s EDGAR website at www.sec.gov/edgar.shtml, and the Company’s website at www.HydroOne.com/Investors.
43
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Exhibit 99.4
 
imageb.jpg















KPMG LLP is a Canadian limited liability partnership and a
member firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services
to KPMG LLP.


Exhibit 99.5
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, David Lebeter, President and Chief Executive Officer, Hydro One Limited, certify that:
1.I have reviewed this annual report on Form 40-F of Hydro One Limited;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: February 13, 2026
/s/ David Lebeter
David Lebeter
President and Chief Executive Officer



Exhibit 99.6
CERTIFICATION
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Harry Taylor, Executive Vice President, Chief Financial and Regulatory Officer, Hydro One Limited, certify that:
1.I have reviewed this annual report on Form 40-F of Hydro One Limited;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.

Date: February 13, 2026
 /s/ Harry Taylor
 
Harry Taylor
 Executive Vice President, Chief Financial and Regulatory Officer



Exhibit 99.7
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Hydro One Limited (the “Company”) on Form 40-F for the year ended December 31, 2025 (the “Report”) as filed with the U.S. Securities and Exchange Commission,
I, David Lebeter, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

i.The Report fully complies with the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
ii.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 13, 2026
 
/s/ David Lebeter
 
David Lebeter
 President and Chief Executive Officer



Exhibit 99.8
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Hydro One Limited (the “Company”) on Form 40-F for the year ended December 31, 2025 (the “Report”) as filed with the U.S. Securities and Exchange Commission,
I, Harry Taylor, Executive Vice President, Chief Financial and Regulatory Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 

i.The Report fully complies with the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
ii.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 13, 2026
  /s/ Harry Taylor
  
Harry Taylor
  Executive Vice President, Chief Financial and Regulatory Officer


Code of Business Conduct

 
Hydro One | Code of Business Conduct Contents Our core values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Application of this Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Who must follow this code? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 What is expected of me? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 What else is expected of supervisors? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 What happens if I violate this Code? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 What if I have questions? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Standards of business conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Health and safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Respecting each other: No discrimination or workplace harassment . . . . . . . . . . . . . . . 5 Diversity and inclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Working at our highest potential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Conflicts of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Avoiding conflicts of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Family members and friends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Pursuing outside activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Accepting Board appointments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Making investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Confidential information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 No disclosure of confidential information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Permitted disclosure of confidential information . . . . . . . . . . . . . . . . . . . . . . . . . 9 Employee confidential information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Ethical purchasing decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Gifts and entertainment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Insider trading and personal advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Protecting the environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Safeguarding Hydro One’s assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Proper use of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Critical cyber assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Records and document retention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Accounting and finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

 
Hydro One | Code of Business Conduct Fraudulent activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Managing risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Using email, the Internet, social media and electronic communication devices . . . . . . . . 15 Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Relationships with investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Relationships with customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Fair competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Use of Intellectual property belonging to others . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Political participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Conducting business outside of Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Dealing with public officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Finality to the investigation process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Compliance and reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 No reprisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Anonymous reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Paramountcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Amendment and interpretation; waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

 
Hydro One | Code of Business Conduct 1 Our core values Safety Comes First – Stand for People – Empowered to Act – Optimism Charges Us – Win As One: these core values are the foundation of our business. These values are reflected in this Code of Business Conduct (this “Code”), which defines how each of us, as employees, officers and directors of Hydro One Limited and Hydro One Inc. and their respective subsidiaries (together, “Hydro One”), act. For Hydro One to be successful, we must continually earn the trust and confidence of our customers, investors, stakeholders and each other. Each business action and decision provides us with this opportunity. Our core values guide our actions and decisions by reminding us each day of who we are and strive to be in all of our business activities. We must strive to conduct business on behalf of, and to represent, Hydro One with unfailing honesty and integrity and to uphold each of our core values: Safety comes first We make the world a safer place Stand for people We believe in equity, diversity and inclusion as the source of our strength Empowered to act We recognize our power to improve people’s lives  Optimism charges us We see potential in everything Win as one We work together to deliver results

 
Hydro One | Code of Business Conduct 2 Application of this Code Who must follow this Code? All employees and officers of Hydro One, including the President and CEO, Chief Financial & Regulatory Officer, and directors of Hydro One are required to comply with this Code as representatives of Hydro One (collectively, “representatives”). In addition, Hydro One requires each of its contractors, suppliers, business partners, consultants and agents (together, “business partners”) to comply with this Code, to the greatest extent feasible, in their dealings with or on behalf of Hydro One. What is expected of me? We are all expected to: • Comply with this Code: We must read, complete any required training on, understand and comply with this Code and all applicable laws, rules and regulations (“applicable laws”) relevant to our roles at Hydro One. • Report violations of this Code: If we have knowledge of an actual, potential or suspected violation of this Code or of applicable laws, we must report it truthfully and in good faith to our supervisor, HR representative or to the Corporate Ethics Office or otherwise in accordance with Hydro One’s Whistleblower Policy. For information on how to make an anonymous report of an actual, potential or suspected violation of this Code or of applicable laws, see the “Anonymous Reporting” section below. • Use good judgment: We must use our good judgment in deciding whether or not an action will be in compliance with this Code and be accountable for our actions. • Ask questions: If we have any doubt about how to proceed under this Code, we must ask questions. The section “What if I Have Questions?”, below, includes a list of helpful resources. Employees and contractors are expected to familiarize themselves with this Code when they first start work and complete all required training thereafter, including the annual Code of Business Conduct training. Management Compensation Plan (“MCP”) employees must complete and sign annually, and update as necessary, a Code of Business Conduct Compliance Form, confirming their compliance with this Code and declaring all outside appointments, directorships or officer positions and any resulting conflicts of interest. This form is available on the Code of Business Conduct homepage. Remember: MCP employees are not only required to complete and sign a Code of Business Conduct Compliance Form annually, they are also required to resubmit a Form if any circumstances should change throughout the year.

 
Hydro One | Code of Business Conduct 3 What else is expected of supervisors? Supervisors share the same obligations as other representatives, but are also expected to: • Set an example: Supervisors must model appropriate conduct under this Code as it applies to them and to their own actions. • Report to the Corporate Ethics Office: Any actual, potential, suspected violations of the Code, as well as any conflict of interest declarations, must be reported to the Corporate Ethics Office. • Promote understanding and compliance: Supervisors must make sure that Hydro One representatives that they supervise understand and comply with this Code and all applicable laws. Supervisors must also review this Code and Hydro One’s Whistleblower Policy with those representatives at least annually. • Provide guidance: Supervisors should be a knowledgeable and reliable source of advice for questions relating to this Code and should create an environment where representatives feel comfortable raising questions or concerns without fear of reprisals. What happens if I violate this Code? If we violate this Code or any applicable laws relevant to our roles at Hydro One, we will be subject to disciplinary procedures, which may have consequences up to and including dismissal. Such violations may also result in criminal, regulatory and/or civil liability. What if I have questions? Honesty and common sense are the best guidelines for assessing whether or not an action will be in compliance with this Code, and Hydro One relies on each of us to apply our own personal judgment in carrying out our duties. However, this Code is not a complete guide to every legal or ethical issue that we may encounter, nor is it a summary of all applicable laws and Hydro One policies and procedures that may apply in a given situation. As a result, there will be times where we will have questions about how this Code applies to us, or about whether a particular action will be in compliance with this Code. If you have any questions relating to this Code, you should speak to your supervisor and consult the Hydro One intranet site - Questions and Answers - for a detailed list of frequently asked questions relating to this Code. You should also ask yourself the following questions, which may help to guide your decision: • Will my action comply with the intent and purpose of this Code and applicable laws? • Is my action appropriate, ethical and honest – does it “feel” right, or might it violate my own personal code of conduct? • Would most people see the action as being appropriate, ethical and honest? • Could I defend my action in front of superiors, fellow employees, the general public and my friends and family? Would I be comfortable doing so? If the answer to any of these questions is “No”, then you should not take the action. If your question remains unanswered after you have spoken to your supervisor, reviewed the intranet resources and considered the questions above, you should contact Hydro One’s Corporate Ethics Office for advice.

 
Hydro One | Code of Business Conduct 4 Standards of business conduct Health and safety We strive to deliver Hydro One’s products and services in a safe manner that minimizes the risk of injury to ourselves, to one another and to the general public. Each of us must: • work safely by making sure our own safety and that of other Hydro One representatives and the general public are the prime consideration in every decision we make and every action we take; • come to work fit for duty and remain fit for duty at all times when engaged in Hydro One business, when on Hydro One premises and worksites, when scheduled to be “on-call” (including stand by and service duty), and when having care and control of a Hydro One vehicle, heavy machinery and/or equipment; • not work, or permit others to work, while under the influence or suffering the after effects of alcohol, cannabis, medication or illicit drugs, or bring, offer for sale, or permit anyone else to bring or offer for sale, alcohol, cannabis or any illicit drugs into any Hydro One workplace; and • comply with Hydro One’s Health and Safety Policy and Safety Rules, and any policies and procedures relevant to the performance of work in a safe and effective manner. Working safely means that we must identify, report and, where appropriate, correct workplace hazards. Fit for Duty means an employee is able to perform duties of the job in a safe, effective and predictable manner ensuring they have both the physical and mental acuity to minimize risk in the work environment. This means that an employee must perform work without limitations resulting from intoxicants, such as alcohol and drugs (e.g. cannabis, illicit drugs, prescription and over-the- counter medications), as well as, injury or illness, emotional or personal issues affecting mental health, fatigue, and environmental factors.

 
Hydro One | Code of Business Conduct 5 Respecting each other: No discrimination or workplace harassment We treat all Hydro One representatives, business partners and others we encounter in the course of our work for Hydro One with dignity and respect. We act in a manner that values the background, experience, perspective and talent of each individual and do not discriminate against or harass others. We strive to create an inclusive corporate culture at Hydro One and a workforce that reflects the diverse populations of the communities in which we operate. In particular, we: • provide all Hydro One representatives with equitable access to opportunities, within the confines of legal and collective agreement requirements; • do not discriminate in hiring and employment practices; • do not engage in any workplace harassment; • do not tolerate any violence or workplace harassment, or behaviours that may promote violence or workplace harassment, in any Hydro One workplace; and • comply with Hydro One’s Workplace Human Rights and Anti-Harassment Policy and Procedure. • • • • • • • • • Diversity and inclusion Hydro One believes and recognizes that having a diverse and inclusive workforce enhances Hydro One’s organizational strength and economic returns, creates sustainable economic advantage, and reflects the diversity of our stakeholders, including customers, employees, suppliers and shareholders, and the demographics of the communities in which we operate. We must all act in a manner that is consistent with Hydro One’s commitment to diversity and inclusion and seek to recognize the mutual benefits from working together with people from different backgrounds and experiences. Working at our highest potential We are all accountable for our work and for our results and are committed to giving our full effort in everything we do. We expect to be evaluated by standards such as quality, quantity, timeliness, and whether the work has been completed safely and within the limits of allocated resources. We follow instructions from our supervisor and ask questions when appropriate. “discrimination” is an action or a decision that treats a person or a group of persons negatively and differently on the basis of race, ancestry, colour, place of origin, sex, ethnic origin, age, marital or family status, disability, sexual orientation, gender identity, gender expression, record of offences, creed, religion or citizenship, nor on any other grounds that are prohibited by applicable law. “workplace harassment” is engaging any course of vexatious conduct or comment toward another representative or business partner of Hydro One or others we encounter in the course of our work for Hydro One that is known or ought reasonably to be known to be unwelcome, including making any comment or gesture to, contact with or otherwise acting in a manner towards that person that is unwelcome or which is likely to be regarded as offensive.

 
Hydro One | Code of Business Conduct 6 You are a Hydro One ambassador. Our actions in the workplace and outside of work matter as they can have a direct impact on Hydro One’s reputation and brand. We are expected to act professionally and as ambassadors of Hydro One by fulfilling our job duties and meeting our job responsibilities with integrity while showing respect toward customers, employees, suppliers, stakeholders and members of the public. We are expected to complete our duties with best efforts, skill and in a timely manner while applying good judgment. Supervisors must follow leadership practices that promote employee commitment and encourage high performance, set clear expectations and provide appropriate support and timely feedback to the Hydro One representatives who report to them. Conflicts of interest Avoiding conflicts of interest We owe a duty to Hydro One to make decisions with honesty and integrity and not to deprive Hydro One of the time and attention required to properly perform our duties on behalf of Hydro One. We must declare all conflicts of interest (as defined below) to our supervisor or to the Corporate Ethics Office in a timely and forthcoming manner. Conflicts should be declared as soon as the potential for a conflict of interest is identified and must be declared before engaging in the proposed activity. Family members and friends We have a conflict of interest where any of our family or friends receive a personal benefit, or may receive a personal benefit, as a result of any business decisions we make on behalf of Hydro One. We must not receive or give special consideration relating to employment, conditions of employment or any other business decision to or from family members and friends. All of Hydro One’s business and human resources decisions must be based on sound ethical business and management practices and not influenced by personal concerns. A “conflict of interest” is a situation where our own personal interests: • actually conflict with those of Hydro One; • have the potential to conflict with those of Hydro One, meaning a situation where our relationship to others or interest in or relationship to another business or organization could result in a conflict of interest in the future; or • could be perceived to conflict with those of Hydro One, meaning a situation where other people (either inside or outside of Hydro One) might think that our personal interests conflict, or could potentially conflict, with those of Hydro One, whether or not we think that any conflict does, or might, exist.

 
Hydro One | Code of Business Conduct 7 Pursuing outside activities We are encouraged to contribute to our communities and to our professional organizations and we may engage in activities or do work outside of Hydro One (including for ourselves) provided that the activity or work does not create a conflict of interest. Examples of activities or work outside of Hydro One that will create a conflict of interest include: • work for an organization that is or is reasonably expected to become a supplier to or a commercial or industrial customer or competitor of Hydro One; • activities that affect our work performance at Hydro One, including those that take too much of our time; • work for any organization done on Hydro One’s time or using Hydro One equipment, supplies, personnel or intellectual property; and • promoting any non-Hydro One product or service or, except with prior approval, soliciting donations to any charitable or non-profit organization, on Hydro One’s time or to Hydro One representatives or business partners. Accepting Board appointments We obtain the prior approval of the Corporate Ethics Office before agreeing to serve as a director on the board of another for-profit business or organization if our service on that board could create a conflict of interest, including in any case where the business or organization is or is reasonably expected to become a supplier to or a commercial or industrial customer or competitor of Hydro One. Prior approval of the Corporate Ethics Office is not required to serve as a director of: • a Hydro One board at Hydro One’s request; or • a charitable or community organization, but only so long as our service on that board does not reflect negatively on Hydro One and does not take too much of our time or otherwise conflict with our work at Hydro One. If we serve as a director on any board (other than a Hydro One board), we must not vote on any matter that concerns Hydro One or which we think might otherwise create a conflict of interest for us or for Hydro One. Similarly, if we act as a spokesperson for any business or organization, we make it clear that we are speaking for that business or organization or for ourselves and not as a spokesperson or representative of Hydro One. If in doubt at any time about whether service on any board creates a conflict of interest, speak to your supervisor or to the Corporate Ethics Office. REMEMBER: If you have any doubt about whether the external activity or work creates a conflict of interest, you must speak to your supervisor or to the Corporate Ethics Office before engaging in the activity or work.

 
Hydro One | Code of Business Conduct 8 Making investments In general, investments made by us or by our immediate family members in publicly-traded or privately- held businesses or organizations will not create a conflict of interest, but we must be aware that these investments may create a conflict of interest in some circumstances. Where an investment creates a conflict of interest, we must obtain the approval of our supervisor and the Corporate Ethics Office before making the investment. Investments that will create a conflict of interest include investments in businesses or organizations that compete with Hydro One or which have a business relationship with Hydro One as a supplier or as a commercial or industrial customer. However, this prohibition does not apply if the investment represents less than five percent of the issued and outstanding equity securities of the business or organization (including equity securities held by us and by our immediate family). We must also promptly notify our supervisor and the Corporate Ethics Office if we know a family member or a friend has an investment that represents more than five percent of the issued and outstanding equity securities of a business or organization that competes with Hydro One or which has a business relationship with Hydro One as a supplier or as a commercial or industrial customer, even where we do not hold an investment in that business or organization ourselves. Confidential Information No disclosure of confidential information We do not disclose Confidential Information to anyone outside Hydro One, including to family and friends, unless it is done in accordance with this Code and all other applicable Hydro One policies and applicable laws. This section applies to information which Hydro One has obtained from a customer or supplier (or a prospective customer or supplier) that Hydro One has agreed to keep confidential. Our obligation not to disclose Confidential Information continues even after we cease to have an employment or other relationship with Hydro One. In order to protect Confidential Information of Hydro One, we must: • be alert to inadvertent or accidental disclosure of Confidential Information in social conversations, including in public places, at trade conferences, on public transit or airplanes, on mobile devices or in normal business discussions with suppliers and customers; • never post, transmit or make available any Confidential Information on or through the internet other than through the use of approved Hydro One equipment and systems (i.e. through the use of Hydro One email addresses or Hydro One intranet portals); • never leave Confidential Information or devices that contain Confidential Information, or which are connected to or have specific capability to connect to Hydro One’s systems, unattended in public places, and we must ensure these devices are stored securely when not in use; and “Confidential Information” of Hydro One includes trade secrets, intellectual property and any proprietary, sensitive, technical, commercial, strategic, financial, customer, supplier and personal information about customers, suppliers and representatives, in each case, that is not publicly available.

 
Hydro One | Code of Business Conduct 9 promptly report any Confidential Information that we believe has been leaked and any device that is lost or stolen to the General Counsel or Hydro One Security, respectively, so that appropriate steps can be taken by Hydro One. Permitted disclosure of confidential information We may only disclose Confidential Information to our colleagues within Hydro One where it is necessary for them to perform their assigned work. We keep the amount of Confidential Information shared with anyone outside of Hydro One to the minimum required, and we may only disclose Confidential Information outside Hydro One where the disclosure is: • required by applicable laws or stock exchange rules or to those having a business relationship with Hydro One for valid business purposes; and • in compliance with all applicable Hydro One policies and procedures, including the Corporate Disclosure Policy (if applicable). The Law Department should be contacted if there is any uncertainty as to whether or not we are permitted to disclose the Confidential Information. Employee confidential information We manage all personal information about other representatives of Hydro One in a confidential manner and we respect the privacy of each other Hydro One representative, including by complying with all applicable privacy legislation and all applicable Hydro One policies and procedures. Ethical purchasing decisions We make all purchasing decisions honestly and with integrity, using such criteria as competitive pricing, quality, quantity, delivery, and service. We comply and ensure our business partners comply with Hydro One’s Supplier Code of Conduct, including with respect to Hydro One’s zero tolerance of modern slavery in its labour force or supply chains. We avoid making purchasing decisions that create a conflict of interest for us or for Hydro One, including where there could be an allegation of favouritism, prejudice, preferential treatment or personal gain. We inform each of our business partners about this Code and about our expectation that they comply with it, to the greatest extent feasible, in their dealings with or on behalf of Hydro One. We will communicate any non- compliance by any of our business partners to Hydro One’s Corporate Ethics Office, who will recommend what actions should be taken, up to and including termination of the business relationship.

 
Hydro One | Code of Business Conduct 10 Gifts and entertainment We do not (directly or indirectly) offer, give, request or accept any: • bribe or kickback or other transaction which could compromise the integrity or harm the reputation of Hydro One or its representatives; • gifts of cash, gift certificates, services, discounts, or loans; • gift, entertainment, or similar type of benefit that does not serve a legitimate business purpose; • gift, entertainment, or similar type of benefit that contravenes any applicable law; or • gift, entertainment, or similar type of benefit that creates a conflict of interest for us or for Hydro One. Any gift, entertainment, donation or contribution or similar type of benefit that is offered, given or accepted must be of a nature and amount that avoids embarrassment, does not constitute a real personal enrichment of the recipient, and would not reflect unfavourably on Hydro One or the person receiving the gift, entertainment or benefit if it became publicly known. Generally speaking, acceptable gifts, entertainment or similar type of benefit will have a nominal value. If you are uncertain whether a gift, entertainment or benefit being offered, given or accepted complies with this Code, you should consult your supervisor or the Corporate Ethics Office prior to accepting the gift, entertainment or similar type of benefit. Any gifts, entertainment or similar type of benefit we are offered or receive that do not comply with these restrictions must be declined or returned graciously and with thanks and a clarification of Hydro One’s policy set out in this Code. If returning the gift is not possible, it should be donated to charity upon approval of the General Counsel (or their designate). These requirements do not change during traditional gift-giving seasons. A “bribe” may take many forms, including: cash, gift cards, gifts, entertainment, meals, travel, below market loans, preferential hiring, favours, political donations and charitable contributions.

 
Hydro One | Code of Business Conduct 11 When soliciting donations or event participation from suppliers, compliance with the Supplier Code of Conduct and the Code of Business Conduct are mandatory. These policies protect Hydro One from reputational risk, conflicts of interest and ensure compliance with Canadian procurement law, among other legal obligations. There must be no undue pressure imposed on any supplier to contribute and/or participate. Insider trading and personal advantage We only buy or sell securities of Hydro One in accordance with Hydro One’s Insider Trading Policy. This means that we do not buy or sell securities of Hydro One while we know about “Material Information” relating to Hydro One that has not been generally disclosed to the public in accordance with Hydro One’s Corporate Disclosure Policy (“insider trading”). We also keep all undisclosed Material Information confidential and we do not pass any of it on to others, including to a spouse, friends or family members (“tipping”). We must also not recommend the purchase or sale of securities of Hydro One while in possession of undisclosed Material Information (“recommending”). In addition to being a violation of this Code, both insider trading, tipping and recommending are illegal. We do not use any Confidential Information for private speculation or personal advantage or benefit, including for purposes of trading in securities of any of Hydro One’s customers or suppliers with the benefit of any Confidential Information relating to that customer or supplier. Protecting the environment We strive to comply with all environmental laws, rules and regulations, and Hydro One will also move beyond compliance where it makes business sense to do so. We design, build and operate our facilities to make efficient use of resources, prevent pollution and reduce environmental effects to the extent that is reasonably achievable. We set environmental objectives and targets, monitor our performance relative to expectations and implement programs to achieve continual improvement. “Material Information” has the same meaning as in Hydro One’s Insider Trading Policy and Corporate Disclosure Policy, and may include Confidential Information, including information about Hydro One’s plans, financial conditions or operations.

 
Hydro One | Code of Business Conduct 12 Safeguarding Hydro One’s assets Proper use of assets We use Hydro One’s assets properly, safely, efficiently and only for Hydro One business. Use of Hydro One assets for charitable or other non-business reasons must be pre-approved by the supervisor accountable for that asset. Misuse of Hydro One assets to offend, harass or harm others, or to encourage others to do so, is unacceptable. We take good care of Hydro One assets. We protect them from all external and internal threats and, when they are no longer useful, we dispose of them in a proper manner. Theft or fraud will not be tolerated. Notwithstanding any practice(s) and/or provision to the contrary in any other Hydro One policy, procedure, or other corporate requirement, use by an employee of a Hydro One asset or device for non-Hydro One purposes, including personal use, shall be at the employee’s sole risk and expense. Hydro One shall not assume or be deemed to assume liability for such employee use. Critical cyber assets We must be vigilant in protecting Hydro One’s Critical Cyber Assets from attack and follow Hydro One’s Power System Cyber Security Policy. Further, we do not disguise our own identity, or use the identity of another representative or business partner, when accessing any Hydro One workplace, device, system or other property. “Critical Cyber Assets” are all computer equipment and software essential to the reliable operation of Hydro One’s facilities which if hacked or destroyed, would affect the reliability of the interconnected transmission system across North America. It also includes all devices and equipment used to access such computer equipment and software.

 
Hydro One | Code of Business Conduct 13 Records and document retention Records are important to provide evidence of Hydro One’s business activities, decisions, operations and transactions, to meet our business, financial reporting and legal needs. We are all responsible for managing Hydro One records in accordance with Hydro One’s Records Management Program, including Hydro One’s Records Management Policy, Records Management Procedures, email Management Policy, and the Legal and Tax Holds Policy. All business expenses must be properly incurred, documented, reported, and approved in compliance with Hydro One’s Employee Business Expense Policy. Intellectual property All intellectual property which we may produce, develop, make, compose, write, perform or design, whether alone or with others, while employed at Hydro One (whether during or outside of work hours) and in any way relating to Hydro One’s business belongs exclusively to Hydro One. We must disclose all such intellectual property to Hydro One and all rights we may have in such intellectual property are assigned to Hydro One. Accounting and finance All financial transactions must be properly approved in accordance with Hydro One’s authority approval guidelines and properly recorded in accordance with: • Hydro One’s internal control policies and procedures; • legal requirements; • audit practices; and • accounting standards and practices. Any financial information provided must be accurate, complete, objective, timely and understandable. We do not maintain undisclosed funds or accounts or “off-the-books” records or use any other device to distort records or reports of Hydro One’s true operating results and financial condition. All cash and bank account and other business transactions are conducted in an appropriate manner which safeguards against bribery, kickbacks, money laundering or other illegality. Falsifying or maintaininginaccurate or incomplete records can result in civil and criminal penalties to Hydro One and the individuals involved. We must not mislead, manipulate, coerce or fraudulently influence any accountant, including an accountant engaged in the performance of an audit of the financial statements of Hydro One in order to make the financial statements materially misleading. “intellectual property” includes ideas, know-how, inventions, designs, discoveries, formulae, improvements, research, trade secrets, patents, copyright works and other intellectual property rights.

 
Hydro One | Code of Business Conduct 14 If we have concerns about the integrity of financial reporting, we report them promptly. Reports may be made to Hydro One’s Chief Ethics Officer, as Confidential Designee, pursuant to Hydro One’s Whistleblower Policy or, alternatively, may be reported anonymously through ClearView Strategic Partners Inc. (“ClearView”) using the contact information provided under the heading “Anonymous Reporting”. We must all be familiar with the reporting procedures contained in Hydro One’s Whistleblower Policy. Fraudulent activity We take proactive steps to not only deter and detect instances of fraud by Hydro One representatives or any of Hydro One’s customers or business partners, but also to minimize and mitigate the risk of it. We comply with Hydro One’s Fraud Risk Management Policy. If we have concerns about any Hydro One representative or any of Hydro One’s customers or business partners engaging in fraud or in a fraudulent scheme, we report our concerns promptly to Hydro One’s Chief Ethics Officer, as Confidential Designee, pursuant to Hydro One’s Whistleblower Policy or anonymously through Clearview using the contact information provided under the heading “Anonymous Reporting”. “fraud” or a “fraudulent scheme” can include: • supplier or other third-party kickbacks that involve any of Hydro One’s business partners or other third parties providing something of value to a Hydro One representative secretly and with the intent of obtaining an improper or unfair advantage or amount of value from Hydro One; • contract bid rigging schemes that involve Hydro One entering into a contract or other arrangement with a business partner or other third party under false pretenses and, where applicable, without full, fair and transparent competition; • cyber fraud involving the unauthorized accessing of Hydro One’s data, information or systems by a person, which can include the theft of data or information electronically (particularly customer sensitive information) and/or an attempt to extort funds from Hydro One for the return of such data or information or the sale of such data or information for financial gain; • customer billings fraud that includes amounts paid to Hydro One by a customer being diverted or stolen for the financial gain of a person and/or the overcharging or mischarging of Hydro One’s customers by a person for financial gain; • theft of electricity whether as a result of Hydro One representatives allowing customers to receive service without making proper payment for those services or as a result of customers or Hydro One representatives obtaining services themselves without making proper payment; and • corruption and bribes to Hydro One representatives including the receipt of inappropriate payments, services or other forms of values by Hydro One representatives from a Hydro One business partner, customer or other person seeking to receive, in return, some uncompensated benefit or advantage.

 
Hydro One | Code of Business Conduct 15 Managing risk We appropriately identify and control risks, within the limits of our accountabilities and allocated resources. Controlling risk does not mean eliminating all risks. Rather, it means taking steps to manage the risks to acceptable levels for Hydro One. If we are concerned that there are situations where risks are not being appropriately controlled by other Hydro One representatives we will discuss the situation with our supervisor and, if not resolved, we will consult the Corporate Ethics Office for direction. Using email, the Internet, social media and electronic communication devices Access to electronic communication devices such as phones, tablets, computers, email and the internet is made available to promote effective work-related research, improve our development and enhance communication within Hydro One. These resources should generally be used for business purposes only. Information transmitted through Hydro One’s equipment or systems implies affiliation with Hydro One and must reflect positively upon Hydro One. When using Hydro One email or the internet at a Hydro One workplace or on or through a Hydro One device or system, we do not send, receive, display, print, or otherwise engage in any communications that are in violation of applicable laws or this Code, or any other Hydro One policy, including, but not limited to: • downloading programs not already supported by Hydro One; • accessing sites that are unlawful, that carry socially or politically offensive material, that infringe or that may infringe the intellectual property or other rights of another person, business or organization or that are in any way related to terrorism; “risk” means any possible event that may adversely impact Hydro One’s business objectives, no matter how likely or unlikely. If business objectives relevant to our work are not clear, we should ask our supervisor for help.

 
Hydro One | Code of Business Conduct 16 • sending chain letters or threatening, libelous or harassing messages; and • sending, viewing or obtaining pornographic material. We also do not use the internet at a Hydro One workplace or on or through a Hydro One device or system to play games, gamble or to post or send messages under disguised identification. Subject to applicable laws, all information of any kind (including without limitation voice communications and electronic messages) stored or transmitted on Hydro One’s equipment or systems is the property of Hydro One and Hydro One’s equipment and systems and the contents thereof are monitored to support operational, maintenance, auditing, security, and investigative activities. In order to prevent inappropriate use, Hydro One continues to monitor personal use electronic communications. No one using Hydro One’s equipment or systems should assume that their electronic communications, information, computer or other device use is private. The use of social networking tools, applications and platforms such as Facebook, LinkedIn, Google+, Yahoo! Groups, Twitter, YouTube, Bumble, Tindr, Instagram, online comment sections and reviews and blogs, including outside of working hours, is subject to this Code and all applicable Hydro One policies, including Hydro One’s Social Media Policy. Whether during or outside of working hours, employees must not: • post or disclose Confidential Information; or • post comments or materials which could harm, or be perceived to harm, Hydro One or its reputation in any way.

 
Hydro One | Code of Business Conduct 17 Relationships Relationships with investors We disclose Material Information to the public in a timely, factual and accurate manner, in accordance with Hydro One’s Corporate Disclosure Policy. We ensure that all reports and documents that we file with or furnish to securities regulatory authorities in Canada and the United States, and our other public communications, contain disclosure that is full, fair, accurate, timely and understandable. If we are asked by a member of the media, analysts, investors, investment dealers, credit rating agencies or other members of the investment community to give a statement or a presentation, we must explain that we are bound by this Code and Hydro One’s Corporate Disclosure Policy and refer the matter to the Senior Vice President, Corporate Affairs (or the person performing that function) or the Chief Financial & Regulatory Officer. Relationships with customers Hydro One is a customer-focused company and we strive to enhance our customer relationships in every transaction. This means that we: • work in a safe and responsible manner when on the property of a customer or other third party; • act as an ambassador of Hydro One by acting in a professional and empathetic manner when interacting with customers and by responding promptly and courteously to customer enquiries and requests; • keep commitments to customers by following up through completion when resolving a customer’s enquiry or request and by working to prevent a recurrence; • reasonably restore a customer or other third party’s property when work is completed; • do not discriminate against or provide undue preferential treatment to any customer; • seek customers’ views on issues affecting them, consider their views, and give them feedback where possible;

 
Hydro One | Code of Business Conduct 18 • give customers the information they need to make informed choices and ensure they receive truthful information about our products and services; and • respect customers’ privacy and diversity. Fair competition We obey the applicable laws governing competition, not conspiring with anyone to lessen competition. We do not engage in anti-competitive practices or illegal activities such as price-fixing, bid-rigging, and kickbacks. We ensure all procurement policies, procedures and required processes are followed. We comply with Hydro One’s Anti-Bribery and Anti-Corruption Policy. We gather information about competitors in a lawful manner. We do not, directly or indirectly, misrepresent ourselves, use a third party or offer bribes or gifts to solicit proprietary information about competitors. Use of intellectual property belonging to others We do not knowingly use intellectual property belonging to another person, business or organization without their consent, a license or other legal right to use that intellectual property, nor do we copy or permit others to copy any software under license to Hydro One other than in accordance with the applicable license. Political participation As private citizens, we may take part in the democratic process at any level, including campaigning in elections, during non-working hours. Prior approval is required if we need a leave of absence to participate, and our participation must be kept strictly separate from our association with Hydro One. All such leaves of absence will be without pay. Hydro One does not make donations (financial or otherwise) to political parties, elected representatives, or candidates for election at any time. We do not, directly or indirectly, put pressure on colleagues, customers or suppliers to donate time or money to any political party, candidate or political cause. Conduct of business outside of Canada We apply this Code to all of our operations, international as well as domestic, and understand that this Code must be complied with in all circumstances even if conventional practice is different in foreign jurisdictions. We strive to comply with both the letter and spirit of domestic and foreign legal requirements as they apply to our business activities. We also adhere to standards no less onerous than provided by Canadian law concerning the conduct of business in foreign countries. Dealing with public officials All of our dealings on behalf of Hydro One with public officials are to be conducted in a transparent manner that does not compromise the integrity or harm the reputation of Hydro One or its representatives or any public official. We comply with all anti-bribery and anti-corruption legislation, both Canadian and foreign, which may apply to our operations anywhere in the world. Further, even if permitted by applicable legislation or if customary in a jurisdiction, the making of “facilitation payments” of any size to foreign public officials to secure a routine business service or have routine administrative actions performed is prohibited.

 
Hydro One | Code of Business Conduct 19 These restrictions apply to any: • direct disbursement of Hydro One funds; • other benefits or contributions directly from Hydro One; and • funds, benefits or contributions made by us personally or though agents, consultants, contractors, business partners or other third parties. As laws, rules and regulations and policies and directives of regulators can significantly affect Hydro One’s business or operations, from time to time Hydro One may wish to communicate with public officials respecting new laws, rules, regulations, policies and directives, or otherwise seek to participate in the policy- making process. We only do so in compliance with all applicable requirements regarding lobbying activities and with the prior approval of the Corporate Ethics Office. Similarly, prior approval of the Corporate Ethics Office is required before Hydro One or any representative may accept any request to be appointed to an advisory or study group established by any legislative or regulatory body or which otherwise involves public officials. Since Hydro One is in a regulated business and is often in contact with regulators about its business and operations, all Hydro One representatives and business partners responsible for contacts with such public officials must be familiar with and comply with the laws, rules and regulations established by the regulator for such communications, including conflict-of-interest rules applicable to representatives of the regulator. We must also consult with the Corporate Ethics Office prior to hiring a current or former public official because applicable laws restrict Hydro One’s ability to engage former public officials as a representative of Hydro One. We will not hire any such official if they participated in a matter reasonably regarded as involving Hydro One’s interests if that matter is still ongoing. “public official” includes any: • official or employee of a government or of a department, organization, agency or instrumentality of a government; • official who holds a legislative or judicial position; • official of a public international organization; • political party or official of a political party; • candidate for political office; and • person or firm acting for or on behalf of any of the above.

 
Hydro One | Code of Business Conduct 20 Investigations Hydro One’s policy is to cooperate with any appropriate governmental or regulatory investigation. A condition of such cooperation, however, is that Hydro One be adequately represented in such investigations by its own legal counsel. This means that, any time we receive information about a new government, regulatory or other investigation or inquiry, including any written or oral request for information, this information must be communicated immediately, and before any action is taken or promised, to the Law Department. We also cooperate with all internal and external Hydro One investigations, including investigations conducted by the Chief Ethics Officer, as Confidential Designee, pursuant to Hydro One’s Whistleblower Policy, and will afford full, free and unrestricted access to all of Hydro One’s operations, records, facilities and personnel to any external or internal investigators engaged by Hydro One and will take appropriate measures to keep information obtained during the investigation process confidential. Unless otherwise advised by our supervisor or the boards of directors of Hydro One Limited or Hydro One Inc., we will keep confidential the fact that an internal investigation is being conducted. We must never, under any circumstances: • destroy or alter any of Hydro One’s documents or records in anticipation of a request for those documents from any government agency or a court or in connection with any internal Hydro One investigation; • lie or make any misleading statements to any governmental investigator (including routine as well as non-routine investigations) or investigator participating in any internal Hydro One investigation; or • attempt to cause Hydro One, any representative, business partner or any other person, to fail to provide information to any government investigator or to any investigator participating in any internal Hydro One investigation, or to provide any false or misleading information. Finality to the investigation process It is important for all parties involved in an investigation to have finality and closure to the process. Duplicative investigations result in unnecessary cost, duplicative efforts and prevent all parties from moving forward. Repeated or persistent requests to reinvestigate a matter after an investigation has concluded may be a violation of this Code and may result in disciplinary action in appropriate circumstances.

 
Hydro One | Code of Business Conduct 21 Compliance and reporting Upholding Hydro One’s well-earned reputation as an ethical and credible company is a commitment we all share. All of us are expected to uphold our core values and to otherwise comply with this Code, including reporting any violation or potential or suspected violation of this Code promptly, truthfully and in good faith. If we fail to report a violation we know has occurred, then we also will have violated this Code. Representatives and business partners should never have any fears about raising concerns truthfully and in good faith based on their reasonable beliefs, even if they are later found to be mistaken. Speaking up is a behaviour to be encouraged. However, Hydro One believes it is also important to make sure that representatives and business partners are protected from accusations that are frivolous or malicious, such as allegations made in bad faith or to pursue a personal grudge, and if we make any such accusations we will have violated this Code. No reprisals Hydro One will not permit any form of reprisals (including discharge, demotion, suspension, threats, harassment or any other form of discrimination) by any person or group, directly or indirectly, against a representative or business partner who has truthfully and in good faith: • reported actual, potential or suspected violations of this Code and/or any Hydro One Policy or Procedure; • lawfully provided information or assistance in an investigation regarding any conduct which the representative or business partner reasonably believes constitutes a violation of applicable law, including securities laws or applicable federal laws relating to fraud against Hydro One’s securityholders; • filed, caused to be filed, testified, participated in or otherwise assisted in a proceeding related to a violation of applicable securities laws or applicable federal laws relating to fraud against Hydro One’s securityholders; • provided a law enforcement officer with truthful information regarding the commission or possible commission of an offense, unless the individual reporting is one of the violators; or

 
Hydro One | Code of Business Conduct 22 • provided assistance to the Chief Ethics Officer, as Confidential Designee, the Audit Committee, management or any other person or group in the investigation of a report made pursuant to Hydro One’s Whistleblower Policy. Any retaliation against a representative or business partner who has, truthfully and in good faith, made such a report or taken such an action is subject to disciplinary action, which may include dismissal. Anonymous reporting Any actual, potential or suspected violation of this Code can be reported anonymously to the Chief Ethics Officer, as Confidential Designee, in accordance with Hydro One’s Whistleblower Policy, including by mail addressed to “The Audit Committee of the Board of Directors of Hydro One Limited, c/o the Chief Ethics Officer” at 483 Bay St., 8th Floor, South Tower, Toronto, Ontario, M5G 2P5 and marked “confidential” or by email to corporateethicsoffice@HydroOne.com. Alternatively, reports can be submitted anonymously to ClearView by: Telephone: 1.866.921.4491; Internet: clearviewconnects.com; or Confidential Mail PO Box 11017, Toronto, Ontario, M1E 1N0. Reports can be made to ClearView 24 hours a day, 7 days a week, 365 days a year. Choosing to include personal information in a report to ClearView means you have consented to the collection of that personal information by Hydro One, and the information will be sent to Hydro One. All reports should include as much detail as possible, including dates, individuals or witnesses involved and any supporting material or evidence that may be relevant to the matter being reported. Paramountcy This Code references various other policies of Hydro One. If the standard of conduct described in this Code conflicts with any other policy of Hydro One (referred to in this Code), representatives and business partners must comply with the higher of the two standards. However, if an applicable law imposes a higher standard than a Hydro One policy or this Code, representatives and business partners must comply with the applicable law.

 
Hydro One | Code of Business Conduct 23 Amendment and interpretation; waivers Hydro One retains sole discretion in interpreting and applying this Code. Any determination by Hydro One arising from an investigation into a violation or potential or suspected violation of this Code or decision involving a request for a waiver of this Code shall, be final and determinative. Determinations under this Code may be reconsidered in limited circumstances, for example where required by applicable law or where material new information arises not available at the time of the decision. This Code may also be updated, modified, or withdrawn by Hydro One at any time in its sole discretion. This Code, together with any amendments, will be generally disclosed to the public in accordance with all applicable securities laws and stock exchange rules. Any waivers from this Code for the benefit of: • executive officers or directors of Hydro One Limited and Hydro One Inc. - will only be made in exceptional circumstances, may only be granted by the applicable board of directors and will be generally disclosed to the public in accordance with all applicable securities laws and stock exchange rules; or • other representatives - must be made in writing by their supervisor, or if there is no supervisor or the supervisor is unsure whether or not a waiver is appropriate, then the Chief Ethics Officer should be consulted. Approved by the Board on May 14, 2024

 
Code of Business Conduct