Hydro One (TSX:H) released first-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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Summary

Hydro One reported a 9.2% increase in net income attributable to common shareholders, with earnings per share rising to $0.65 from $0.60 year-over-year.

The company outlined significant strategic investments in transmission and distribution infrastructure to meet rising electricity demand driven by Ontario's population growth and economic expansion.

CEO David Leviter announced his retirement, with COO Megan Telford set to take over, signaling continuity in leadership and strategic direction.

Operational highlights include achieving a safety milestone of two years without a high-energy serious incident and recognition for workplace culture and sustainability efforts.

The company remains focused on future growth, expressing confidence in its ability to support Ontario's electricity needs through strategic projects and partnerships, despite a recent regulatory setback regarding storm cost recovery.

Hydro One reiterated its earnings growth guidance of 6-8% annually for the current rate period, based on a 2022 earnings per share baseline.

The company is preparing to file its joint rate application in Q3 2026, emphasizing customer engagement and support for proposed infrastructure investments.

Full Transcript

OPERATOR

Good morning ladies and gentlemen and welcome to Hydro One Limited's first quarter 2026 analyst teleconference. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising. Your hand is raised. To withdraw your question, Please press star 11 again. As a reminder, the call is being recorded. I would now like to introduce your host for today's conference, Mr. Waseem Khalil, Director of Investor Relations at Hydro One. Please go ahead.

Waseem Khalil (Director of Investor Relations)

Good morning and thank you for joining us for our quarterly earnings call. Joining me on the call today are our current President and CEO David Liederer, our Chief Financial and Regulatory Officer, Harry Taylor, and also joining us is our current Chief Operating Officer Megan Telfer. On the call today, we'll provide an overview of our quarterly results and then we'll answer as many questions as time permits during our question and answer session. As a reminder, today's discussion will likely touch on estimates and other forward looking information. Listeners should review the cautionary language in today's earnings release and our MD&A which we filed this morning regarding the various factors, assumptions and risks that could cause our actual results to differ as they all apply to this call. With that, I'll turn the call over to our President and CEO David Liederer.

David Liederer (President and CEO)

Thank you Waseem. This morning I'll provide an update on our recent activities and accomplishments during the quarter. Then Harry will take you through the financial results. As always, I will begin with the safety news. Last month our employees achieved a significant milestone working two years without a high energy serious incident. When this achievement is considered alongside our top quartile, low reportable injury frequency, I'm confident in our ability to create a workplace with zero life-altering injuries or fatalities. As I've said many times on these calls, a safe workplace is the essential foundation of operational excellence. The same factors which create safe workplaces also lead to efficient low cost operations. As announced on February 26, 2026, I made the decision to retire as President and CEO of Hydro One effective June 9, 2026. This was a thoughtful decision which best met the needs of my family and Hydro One. At the same time, we announced that Megan Telford, our current Chief Operating Officer, will assume the role of President and CEO upon my retirement. Megan is a highly respected and proven leader who joined Hydro One in 2020 as a key member of the executive leadership team. She has played a pivotal role in delivering our strong performance. During her time at Hydro One, Megan has held executive responsibility for health and safety and environment strategy, system planning, growth, distribution and transmission operations, human resources, labor relations, indigenous relations, corporate affairs and customer care. Her values, breadth of experience at Hydro One and extensive leadership expertise position her well to lead the organization into its next chapter. Hydro one is entering a period of significant change. Ontario's growing population, electrification and economic expansion are fundamentally reshaping electricity demand across the province. Hydro One is positioned to support this transformation through significant investments in transmission and distribution infrastructure, strong partnerships with first nations unions, municipalities and others, plus an unwavering focus on system reliability, resilience, and affordability. I leave with great confidence in the future of this organization. The leadership team is strong and focused, the strategy is sound and the culture remains grounded in safety, customer service and execution excellence. As mentioned previously, Ontario's demand for reliable, resilient and affordable electricity continues to grow across the province. Strong population growth, industrial investment and accelerating electrification are reshaping how communities live and work and move. Meeting this rising demand is critical to sustaining the problem's long term competitiveness and prosperity. As a trusted leader in transmission development, Hydro One is well positioned to support this growth. We continue to play a central role in Ontario's grid expansion. Working with government, first nations partners, industry stakeholders and local communities, we continue to advance and build the critical infrastructure required. In addition to meeting today's demands, these investments ensure the electricity grid is fit for the purpose for decades by replacing aging infrastructure, reducing congestion and enabling clean energy integration to support economic expansion and community growth. As new transmission projects are planned and awarded, we are pleased to be selected to develop and construct these critical lines. As previously announced, we were designated to develop and obtain all necessary approvals for the Greenstone transmission line in Northern Ontario as well as the Sudbury to Bury transmission line in north central Ontario. Both projects are expected to enter into service in 2032. More recently, Hydro One was designated to develop and construct the Red Lake transmission line in Northwestern Ontario, north of Dryden. This proposed priority project consists of a new double circuit 230kV transmission line extending from the Dryden transformer station to the Ear Falls transformer station including associated station facilities.

Eric

I'll pick up David. Are you okay? Thanks, David. Okay, we'll give David a minute here. I'm going to continue on. We're talking about the Dryden transformer station to the Ear Falls transformer station including associated station facilities and continuing to connect to the Red Lake switching station. This project is expected to be in service by the early 2030s. The addition of the Red Lake transmission line increases our inventory to 15 transmission lines under development and construction and positions Hydro One with a strong and visible growth profile through our next regulatory period. Across each of These projects, our 50/50 First Nation Equity Partnership model ensures that proximate nations share directly in the long term value created by the transmission line infrastructure. The generational ice storm in late March 2025 caused widespread damage across many areas of Ontario and impacted more than 600,000 customers. Hydro One crews, alongside 30 Canadian utility partners and contractors work safely day and night in freezing rain, snow and wind to restore power to those impacted by the storms. As a result of the storm, Hydro One filed a Z Factor application with the Ontario Energy Board. Subsequent to the quarter end, we received a decision from the OEB regarding our Z-factor application denying the recovery of $69 million of incremental revenue related to the costs incurred in the ice storm. While we're disappointed with the outcome, I want to be clear that the decision does not deter our efforts with respect to our joint rate application filing. Hydro One has completed its customer engagement process, receiving significant support for our proposal and our teams are finalizing the application. We remain on track to file it with the OEB in Q3 2026.

David Liederer (President and CEO)

Thank you Eric for stepping in. My apologies to everyone, a springtime cold seems to have taken over my body. Our employees are the heartbeat of Hydro One and their dedication, expertise and professionalism drives our success every day. That is why we are so pleased to see the collective agreement reached with the Society of United Professionals on January 13, 2026. Ratified by Union members, the agreement covers engineering, supervisory and other professional roles and reflects our shared approach on collaboration, stability and long term success. The collective agreement took effect on October 1, 2025 and runs through March 31, 2028, providing certainty for our workforce as we continue to execute on strategic priorities and support Ontario's growing needs. I'm also pleased to report that we reached a tentative agreement with our construction union, the Canadian Union of Skilled Workers, which represents construction line persons and electricians working on critical projects across the organization. This agreement is subject to ratification by CUSW members and once ratified will replace the current agreement expired on April 30, 2026. I would like to thank all bargaining teams for negotiating in good faith to reach agreements that support our employees, customers and the long term health of our company. At Hydro One we have built a culture rooted in dedication, passion, inclusion, empowerment and a strong sense of belonging. The work people do every day drives strong performance and our Teams continue to receive recognition for their efforts. Recently, the company was recognized by Electricity Human Resource Canada with its Excellence in Workplace Culture Award. This recognition acknowledges Hydro One Step up program which supports open conversations around inclusion, allyship and physical psychological safety. We also received the Electrical Distributors Association's Sustainability Excellence Award recognizing our leadership in building sustainable partnerships. Hydro One and the Five Nation Partners were honored for their collaborative and sustainable approach behind the construction of the Chatham Lakeshore transmission line, the first to be complete under our First Nations Equity Partnership model. Finally, we were again named the Globe and Mail's Women Lead Here annual Benchmark which recognizes gender diversity within executive teams across corporate Canada. This recognition reflects our continued efforts to build a strong, diverse executive leadership team that is well positioned to lead Hydro One into the next phase of corporate evolution. Before I turn the call over to Harry to review the financial results, I have a few closing observations as this will be my final call as President and CEO of Hydro One. Serving as the President and CEO of Hydro One has been the privilege of a lifetime. This organization plays a vital role in the lives of every Ontarian and leading it has been both a profound responsibility and an honour. Together we have redefined our safety culture, advanced operational excellence, rebuilt trust with our customers, partners, stakeholders and all levels of government and positioned Hydro One for the future. When I reflect on my time here, I am most proud of the professionalism and dedication our people bring to work every day. Every storm response, every safety milestone, every customer restored and every project delivered reflects their care for one another and for the people of Ontario. Together we successfully navigated unprecedented challenges including COVID-19 extreme weather events, electrification and a trade war by focusing on people, following our strategy and keeping our values front and center. I want to express my sincere gratitude to our employees, our board, our shareholders, partners, the communities we proudly serve and those joining us on the call today. It's been a lot of fun and I'll miss you all over to you, Harry.

Harry Taylor (Chief Financial and Regulatory Officer)

Thank you David. Good morning again everyone and thank you for joining us today. In the first quarter we delivered basic earnings per share of $0.65 compared to $0.60 in the first quarter of 2025. Net income attributable to common shareholders in the quarter was higher by 9.2% compared to the same period from a year ago. The key drivers behind the result this quarter include higher volumes in both distribution and transmission, higher revenue net of purchase power from higher OEB approved 2026 rates and higher average monthly peak transmission demand, lower OM&A costs primarily due to lower work program expenditures including vegetation management and lower income tax expense due to higher deductible timing differences partially offset by higher pre tax earnings. These were partially offset by a higher interest expense due to an increase in long term debt outstanding and higher depreciation, amortization and asset removal costs primarily due to the growth in capital assets. Our first quarter revenue net of purchased power increased year over year by 3%. Transmission revenues increased by 4.4% primarily due to higher average monthly one-hour peak demand that was 0.8% higher and higher revenues from OEB approved 2026 rates. Distribution revenues net of purchased power increased by 0.9% mainly due to a 0.9% increase in customer count. Both the transmission and distribution segments had regulatory adjustments that had offsetting entries and thus are net income neutral. On the cost front, operating maintenance and administration expenses in the quarter decreased by approximately 0.9% year over year. In the transmission segment, costs were higher by 3.1% mainly due to higher corporate support costs partially offset by lower work program expenditures attributable to facilities maintenance and information technology initiatives. In the distribution segment, costs decreased by 5% mainly due to lower work program expenditures including vegetation management, depreciation, amortization and asset removal expenses during the quarter were higher by 3.4%. The increase was primarily due to the growth in capital assets as the: company continues to place new assets in service partially offset by lower asset removal costs. With respect to financing activities, we saw an eight percent increase in interest expense year over year. This was mainly due to the: increase in our outstanding long term debt following the: additional issuances we executed in 2025, partially offset by higher capitalized interest. Our balance sheet continues to be in excellent shape along with our creditworthiness. Our FFO to net debt ratio as of March 31, 2026 was 13.9% and remains well above the: threshold limits the: rating agencies' use to trigger a credit rating review. Turning to taxes, our income tax expense in the quarter was $41 million compared to $68 million in the same quarter last year. The decrease year over year was primarily due to higher deductible timing differences than the previous year including additional tax deductions from the reintroduction of accelerated capital cost allowance that are offset by a corresponding reduction in revenue and therefore net income neutral. This was partially offset by an increase in pre tax earnings. As a result, our effective tax rate this quarter was 9.4% compared to 15.9% a year ago. Turning to our capital expenditures, in the first quarter we invested $715 million which was a decrease of 2.7% over the same period in 2025. The decrease resulted from a lower volume of station refurbishments and equipment replacements as well as a lower spend on customer connections within the transmission segment. Also contributing to the decrease was a lower spend on the St. Clair transmission line and a lower volume of wood pole replacements in both the transmission and and distribution segments. These were partially offset by an increase in the investment in equipment to support our long term growth projects, increased investments in the Advanced metering infrastructure or AMI 2.0 system, as well as the Ontario Broadband Initiative. Looking at our assets placed in service in the first quarter, we placed $484 million in service for our customers, which was an increase of 14.4% compared to the prior year. In the transmission segment, we saw an increase of 39% year over year, primarily due to investments for a high voltage underground cable replacement and investments for station refurbishments and replacements. These were partially offset by the absence of in service additions relating to a customer connection project at a transmission station that occurred last year. In the distribution segment, in service additions decreased by 4.3% from the prior year, mainly due to the overlap of investments related to the Orillia Operations center in service in the prior year and a lower volume of wood pole replacements. These were partially offset by higher investments in the broadband initiative and the AMI 2.0 system. Looking ahead, we continue to expect earnings per share to grow between 6 and 8% annually for this rate period, using the normalized 2022 earnings per share of $1.61 as a base. Finally, I am pleased to report that our board of directors declared a dividend of 35.31 cents per share payable to common shareholders of record on June 10, 2026. With that, we'll open the phone lines and be happy to take questions.

Waseem Khalil (Director of Investor Relations)

Thank you, David and Harry. We will now open the call for questions. The operator will explain the Q&A polling process. As always, we ask that you limit your questions to one question and one follow up. If you have additional questions, we request that you rejoin the queue in case we can address your questions today. My team and I are always available to respond to follow up questions. Please go ahead, Shannon.

Shannon

Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Mark Jarvi with CIBC. Your line is now open.

Mark Jarvi (Equity Analyst)

Yeah. Good morning everyone. First, congratulations, Megan. And all the best to you, David. It's Been a pleasure getting to know you over the last couple years. Maybe Harry's on the broadband investment. You just reiterated the EPS growth guidance. Can you just kind of unpack how that incremental spend on broadband flows through earnings? Is it because a lot of in 2027 doesn't come until really 2028?

Harry Taylor (Chief Financial and Regulatory Officer)

Good morning, Mark. Our guidance hasn't changed in terms of the in service, if you will, of broadband. It's still in the early innings in terms of getting into the rate base between 300 and 700, we're trending well on that. And so it will flow through into earnings once in service. So we'll see impact more in the back half of this year and into next year, but at this point, not enough to take us over or outside the range of the EPS guidance.

Mark Jarvi (Equity Analyst)

Okay, and then just as you think about the JRAP coming up, just in terms of where you guys will start to communicate to the street is the plan here, once you file the application, to revise the CAPEX and provide visibility through 2032? And how would you figure in maybe some of the transmission projects that haven't gone through Section 92 in terms of how you communicate the overall growth, if that's the plan to give an update this fall?

Harry Taylor (Chief Financial and Regulatory Officer)

Mark, as much as I would love to give an update this fall. We will file on or before October 1st of this year, and then what we are proposing will be publicly available and visible. We will not be able to give any specific guidance or updates until we're through and have and have the application approved. As much as I'd like to, as I say, we have to go through the application and until it's approved, we don't want to create any expectations without the confidence knowing that our application and proposals have been been approved.

Mark Jarvi (Equity Analyst)

So the last time the JRAP. was submitted, then you kind of did at least give the CapEx plan. Just taking the numbers in the submission, is that what we'll see? You're just saying you don't give us EPS guidance.

Harry Taylor (Chief Financial and Regulatory Officer)

Correct. You'll see everything that's in the proposal and we can summarize that for you beyond what's in there. We can't do any more.

Mark Jarvi (Equity Analyst)

Understood. Okay. Thanks, Eric.

Shannon

Thank you. Our next question comes from the line of John Mold with TD Cowan. Your line is now open.

John Mold (Equity Analyst)

Hi. Morning, everybody. A couple questions on the regulatory front, maybe starting with the Pulse panel on Local Distribution Company (LDC) that was launched in October, wondering when you're expecting an update from that process, what kind of engagement you've potentially had with it, and then, you know, just more Broadly how you're thinking about the Local Distribution Company (LDC) consolidation opportunity right now.

David Liederer (President and CEO)

Morning, John. David Liebenter here. The Pulse panel, as you know, filed their results in early this year and the government's had them, they've reviewed them. They haven't actually made any indication when they're going to make them public or even if they're going to move forward. Those recommendations I would suggest right now, given we have municipal elections, coming up in Ontario in October of this year, you're not going to see any LDC consolidation for probably the next 18 to 24 months. And that's probably why the government is sitting on those. They want to wait and see what comes out of the election. Now, I'm hypothesize, I'm not the government, but I wouldn't expect they were going to release those results, that we wouldn't see them until the end of the year.

John Mold (Equity Analyst)

Okay, that's very helpful. And then the OEB's next generation rate Framework. I realize it's early in that consultation, but can you maybe just put that into context with how, if at all, it might play into the JRAP process, how that's progressing from your perspective and the engagement that your company's had?

Harry Taylor (Chief Financial and Regulatory Officer)

John, it's Harry here. We are involved in the consultations. The indications are right now that it doesn't, it won't take effect, whatever comes from it, until 2029,. So our rate application will be filed under the current framework and we expect it to go through the process and get approved before the beginning of 2028. And John, we do not expect it to be retroactive at this point, so it wouldn't impact us until 2033 when our subsequent rate period.

John Mold (Equity Analyst)

Okay, okay, great. Thanks for that context. I'll get back in the queue. But, David, just to echo Mark's comments, it's been great working with you and all the best in your retirement. And Megan, best wishes as you step into the CEO role.

David Liederer (President and CEO)

Thank you to both of you.

Shannon

Thank you. Our next question comes from the line of Maurice Choi with RBC Capital Markets. Your line is now open.

Maurice Choi (Equity Analyst)

Thank you. And good morning, everyone. I just want to pick up on a comment you made in your prepared remarks that you have completed your customer engagement for JRAP and receive significant support for your proposal. I assume when you say significant support, that refers to your proposals to expand the network and improve reliability. And if so, where have you seen the biggest need to adjust your proposal given the feedback that you've received?

Harry Taylor (Chief Financial and Regulatory Officer)

Actually, Maurice, the way that we take our customers through. Well, first of all, it's an unprecedented for U.S. level of customer engagement. Well over 100,000 customers of all types, from residential customers to large transmission connected customers throughout and reviewed, put them through exercises in terms of here's what the proposals are. Here are the rate impacts. Do you support it? And then take them through some trade offs about if you'd like more improvements in either reliability or investments in growth. Here's what the rate impact would be. Are you prepared to pay that? Yes, no, et cetera. And we are. You'll see this in the evidence that we file with the rate application. A plurality or a strong majority is in support of what we're proposing and or more, not less. And so that gives us confidence that we are putting together a strong rate application with the support of our customers, knowing full well the bill impacts from the investments and the spending that we're proposing. Maurice, just add a bit more color to that. Over two thirds of the customers, and this is all different customer segments that regardless of the segment, over 2/3 were supportive of the draft plan that we prepared and the areas they're most interested in are reliability, resilience and anything we can do to promote economic activity in the province.

Maurice Choi (Equity Analyst)

Has the pushbacks that you received been at all surprising or pretty much down a fairway based on your initial expectations heading into this?

Harry Taylor (Chief Financial and Regulatory Officer)

There's nothing that we've seen that was either a surprise or a concern that's comforting. If I could just finish off with the discussion about Z Factor. I think you mentioned previously that you were reviewing the decision and will determine the appropriate next steps. I wonder if you could share what these next steps could be and just more philosophically speaking, do you sense that this decision represents a different approach by the regulator versus prior decisions? Marisa, at this point we've reviewed everything and we want to proceed with our rate application. That's the most important thing for us to do. From a regulatory point of view this year, the read through, if you will, to the rate application is very low. This was a very specific set of circumstances. The interpretation of the commissioners who heard our application was fairly narrow in terms of they interpreted one of the conditions being it didn't materially disrupt our operation. From a financial point of view, our ROE's were so strong last year that they didn't feel there was any incremental revenues that were worthy of being authorized to compensate us for the cost and the disruption operationally that we endured. So it was strictly based on the strong financial performance we had last year. They didn't feel anything else was Worthy of that has nothing to do with 2028 through 2032. This is all about just the things David articulated. Improving reliability, investing in the resiliency of the grid, promoting economic development in the province and delivering on electrification within the province. the province.

Maurice Choi (Equity Analyst)

Understood and thank you very much for that. And Harry, hopefully you feel better and best of luck to you and your family. Megan, congratulations.

Shannon

Thank you. Our next question comes from the line of Robert Hope with Scotiabank. Your line is now open.

Robert Hope (Equity Analyst)

Morning everyone. A bit of a longer term question. So the federal government continues to speak on greater electric connectivity between the provinces and Ontario has spoken about the national energy corridor. So what is your thinking on Hydro One can benefit from this at all as well as any potential thinking thoughts on timing.

David Liederer (President and CEO)

Morning, Robert, and thanks for that question. It's a really interesting hypothesis on building out east-west transmission across the province. There's certainly areas where it does make sense across the country to have stronger ties. The two that come to mind most quickly for me are between Manitoba and Ontario and between Quebec and Ontario. And should that materialize and what would that likely mean is more transmission investment for Hydro one. We already have interties with both those provinces and we already have right of ways. So to the extent we're able to use those right of ways to add additional capacity or circuits, that would certainly position us well to be the lead developer on those new transmission lines. I think we have to wait and see when the federal government releases our electrification policy,, which they're going to be opening up to, getting feedback from industry and provinces later on this year.

Robert Hope (Equity Analyst)

All right, thanks for that. And then maybe just moving on to Ontario. So Hydro one has been very successful in getting transmission projects allocated to it over the last year. It appears the government's largely cleared the backlog of its projects pending allocation. So do you expect to see a slowdown in projects allocated to Hydro one, or is there a next wave of projects that you have visibility on?

David Liederer (President and CEO)

Well, a lot of the projects, as you know, were driven by economic activity, starting with the greenhouse sector, so the agricultural sector, then following on with electrification in southern Ontario and now it's moving into developing the resource sector in Ontario. So the two or three areas I would pay attention to, of course there's the Ring of Fire and any expansion of any mineral processing up in Timmins as well comes to mind. So Ring of Fire, Timmins come to mind for mining expansion. Electrification is going to continue. I'd be thinking about what are the steel mills going to do in Hamilton. They're going to have to probably follow similar paths Algoma and then of course there's a recent announcement by the government and Bruce Power looking at advancing Bruce-C to the next stage of that development with an intent to come back by 2030 I believe is the date and make a decision on that. So obviously if Bruce-C were to go ahead and get the green light or final investment decision there'd be significant transmission investment that would have to be made to bring the power from Bruce Peninsula down to GTA and the Golden Horseshoe. And then there's Wesleyville, as well which is further out that the Ontario government as well as OPG are looking at and that would be double the size of Bruce-C. So we do see projects coming down the horizon in the shorter term. So probably in the next five years I'd be looking at mineral exploitation and development in the Ring of Fire and up around the Timmins area and other parts. Longer term I might be thinking about some hydroelectric up to the wards of Bassa James Bay as well as nuclear development in the Bruce Peninsula and along the north shores east of Toronto Wesleyville,.

Robert Hope (Equity Analyst)

alll right, appreciate that David, all the best And Megan, congrats. Thank you all.

Shannon

Thank you. Our last question comes from the line of Benjamin Pham with bmo. Your line is now open.

Benjamin Pham (Equity Analyst)

Hey, thanks. Good morning first off also congratulations David on your retirement as well. I wanted to start off on the storm cost impact does it factor? And maybe you can, I mean you've reaffirmed the EPS target or guidance and it doesn't sound like the storm disallowance's impacting your earnings per share but could you clarify if that's correct or not? And how do you think about the Z factor going forward? Just really the applicability of it does that make sense at all? And how do you think about recovering storm costs of that magnitude going forward?

Harry Taylor (Chief Financial and Regulatory Officer)

Ben, there's a few questions there. Let me go one by one. The denial of our request for incremental revenue doesn't affect the EPS guidance. We hadn't built it into the EPS guidance and so the fact we're not getting incremental revenue is a wash for us if you will. How do we think about was a very narrow set of facts and a narrow application. We have normal course storm restoration expenses expenditures, not just expenses, capital expenditures as well in our base this was something that was extraordinary and we believed it met all the tests for the Z factor and therefore brought the application. But it doesn't mean that we will not have normal course storm restoration either. Costs in OM&A and capital expenditures in rate base that's normal course for us. So this was a truly extraordinary event with an extraordinary decision that isn't something that is the beginning of a pattern or a change in how storm restoration is impacted. One of the things that we need to think about in our rate application is putting in something like a deferral and variance account for extraordinary storm expenditures that would likely meet the test, but maybe not. And so that's something that we are considering at this point.

Benjamin Pham (Equity Analyst)

Okay, got it. I totally understand and maybe I can next go to the if you can maybe qualitatively compare and contrast the growth differences between the current jrap and jrap 2.0. I know specifically you've mentioned that EPS is poised to accelerate, but I'm just curious more the building blocks of that EPS you get the current guidance of 6% Farrap plus 2% plus on these various different levers. Can you comment on going forward? Really if those variances could potentially be increasing over time, do you expect to be a plus 2% and sustain that?

Harry Taylor (Chief Financial and Regulatory Officer)

As much as I would love to Ben, I can't. We have to a finalize the application and then get it approved. And once we do, we will hold an investor day, lay out all the expectations. Once we file as market asked, we can summarize based on what's in the filing, impact on capital expenditures, et cetera. But until the application is approved we can't really give any guidance because it is dependent on what is ultimately approved in the application.

Benjamin Pham (Equity Analyst)

Yeah, okay. Maybe if I can just try it a different way. Let's say you got approved for 6% JRAP again is the next 5 year period. When you think about the priority transmission projects, the LDC opportunities, the broadband and rate base, is it much more positive outlook than how you viewed the current JRAP where it's at 6% going up to 8% potentially.

Harry Taylor (Chief Financial and Regulatory Officer)

Well, I can't at this point. The one technical piece is our joint rate application is for Hydro One Networks Inc. Transmission lines will all be affiliate transmission partnerships. That's the term we use. They'll have their own rate application once they're ready to be energized and they'll go through the rate application process as well. So Hydro One Limited will be more than just, I'll say just more than what is in the rate application. This is why we will hold the investor day once the rate application is approved, lay everything out. We'll give as much context as we can post filing. But we have to be very careful. We do not want to get ahead of the application process because that is so important, to make sure that we have a chance to make our case to the interveners and the commissioners before we go public with any specific guidance that you're looking for. I wish I could give you a better answer, but I can't.

Benjamin Pham (Equity Analyst)

Okay. I got it. Okay. Okay. Well, thanks a lot. Thanks for your caller.

Harry Taylor (Chief Financial and Regulatory Officer)

You're welcome.

Shannon

Thank you. And that does conclude our Q and A session for today. I'd like to turn the call back over to Waseem Khalil for any further remarks.

Waseem Khalil (Director of Investor Relations)

Thank you, Shannon. The management team thanks everyone for their time with us this morning. We appreciate your interest and your continued support. If you have any questions that we weren't able to address on the call today, please feel free to reach out and we'll get them answered for you. We look forward to seeing everyone at our second quarter conference call in August. Thank you again and enjoy the rest of your day.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.