MANAGEMENT’S DISCUSSION AND ANALYSIS  Capability to Deliver Results Results and Outlook OVERVIEW Our Businesses Our company has three reportable segments:  In 2013, we made capital investments totaling $1,394 million to improve our transmission and distribution systems’ reliability and performance,  address our aging power system infrastructure, facilitate new generation, and improve service to our customers. Capital investments for the  next few years will include expenditures required to build critical infrastructure identified in the Long-Term Energy Plan (LTEP), which is based on  recommendations from the Ontario Power Authority (OPA), and expenditures to address our aging power system infrastructure. Our future capital  expenditures are more fully described in the section “Future Capital Investments.” During 2013, our financial fundamentals remained strong with net income of $803 million. In 2013, we issued $1,185 million of long- term debt, the proceeds of which were used to fund the retirement of $600 million of long-term debt, and to fund a portion of our capital  expenditures and other corporate requirements. A full discussion of our results of operations and financing activities can be found in the sections  “Annual Results of Operations” and “Liquidity and Capital Resources.” We continue to use a balanced scorecard approach as we strive to manage our performance and deliver results each and every year. In  2013, we set nine stretch targets and we met or exceeded five of them. In 2012, we also met or exceeded five of nine stretch targets. We met  our target for minimizing the duration of unplanned customer interruptions within our Distribution Business. We also met our targets of satisfying  our transmission and distribution customers with the service they receive from our company. Our targets, and our 2013 performance relating  to these targets, are discussed in the section “Performance Measures and Targets.” Our ability to deliver results in each of our strategic areas is  limited by risks inherent in our regulatory environment, our business, our workforce, and in the economic environment. These risks, as well as our  strategies to mitigate them, are discussed in the section “Risk Management and Risk Factors.” • Our Transmission Business, which comprises the core business of providing electricity transportation and connection services, is  responsible for transmitting electricity throughout the Ontario electricity grid;  • Our Distribution Business, which comprises the core business of delivering and selling electricity to customers; and  • Other, the operations of which primarily consist of those of our telecommunications business.  Transmission Total Assets December 31, 2013  (millions of Canadian dollars)  Our Transmission Business includes the transmission business of our subsidiary Hydro One Networks, which owns and operates substantially all of Ontario’s  electricity transmission system. Our transmission system forms an integrated  transmission grid that is monitored, controlled and managed centrally from our  Ontario Grid Control Centre. Our system operates over relatively long distances  and links major sources of generation to transmission stations and larger area load  centres. In 2013, we earned total transmission revenues of $1,529 million, primarily  by transmitting approximately 140.7 TWh of electricity, directly or indirectly, to  substantially all consumers of electricity in Ontario. Our transmission system is one of  the largest in North America, and it is linked to five adjoining jurisdictions through  26 interconnections, through which we can accommodate electricity imports of up  to 6,510 MW in the summer and 6,390 MW in the winter, and electricity exports  of up to 6,070 MW in the summer and 6,270 MW in the winter. In terms of assets,  our Transmission Business is our largest business segment, representing approximately  55% of our total assets at December 31, 2013. Other $974 Distribution $8,805 Transmission $11,846 16 HYDRO ONE ANNUAL REPORT 2013