MANAGEMENT’S DISCUSSION AND ANALYSIS  With the introduction on August 26, 2010, of the OEB’s competitive transmission project development planning process, in the absence  of a government directive, all interested transmitters will be required to submit a bid to the OEB for identified enabler facilities and network  enhancement projects. Historically, we would have been awarded such projects through our rates and Section 92 applications. The facilitation  of competitive transmission could impact our future work program and our ability to expand our current transmission footprint. In addition, bid  costs are recoverable only by the successful proponent. This could have a material adverse effect on our company. We continually monitor the condition of our assets and maintain, refurbish or replace them to maintain equipment performance and provide  reliable service quality. Our capital programs have been increasing to maintain the performance of our aging asset base. Execution of these plans is partially dependent upon external factors, such as outage planning with the IESO and transmission-connected customers, funding approval by the OEB, and supply chain availability for equipment suppliers and consulting services. In addition, opportunities to remove equipment from service to accommodate construction and maintenance are becoming increasingly limited due to customer and  generator priorities.  By the end of 2013, approximately 16% of our employees were eligible for retirement, and by the end of 2014, there could be up to 20%  eligible to retire. Accordingly, our success will be tied to our ability to attract and retain sufficient qualified staff to replace those retiring. This will  be challenging as we expect the skilled labour market for our industry to be highly competitive in the future. In addition, many of our employees  possess experience and skills that will also be highly sought after by other organizations both inside and outside the electricity sector. We are  therefore focused on earlier identification and more rapid development of staff who demonstrate management potential. Moreover, we must  also continue to advance our technical training and apprenticeship programs and succession plans to ensure that our future operational staffing  needs will be met. If we are unable to attract and retain qualified personnel, it could have a material adverse effect on our business.  The substantial majority of our employees are represented by either the Power Workers Union (PWU) or the Society of Professional Energy  Workers (Society). Over the past several years, significant effort has been expended to increase our flexibility to conduct operations in a more  cost-efficient manner. Although we have achieved improved flexibility in our collective agreements, including a reduction in pension benefits for  Society staff hired after November 2005 similar to a previous reduction affecting management staff and increased pension contributions for  PWU and Society staff, we may not be able to achieve further improvement. The existing collective agreement with the PWU will expire on  March 31, 2015, and the existing Society collective agreement will expire on March 31, 2016. We face financial risks related to our ability  to negotiate collective agreements consistent with our rate orders. In addition, in the event of a labour dispute, we could face operational risk  related to continued compliance with our licence requirements of providing service to customers. Any of these could have a material adverse  effect on our company. We have a defined benefit registered pension plan for the majority of our employees. Contributions to the pension plan are established by  actuarial valuations which are minimally required to be filed with the Financial Services Commission of Ontario on a triennial basis. The most  recently filed valuation was prepared as at December 31, 2011, and was filed in May 2012. Our company contributed approximately $160 million in respect of 2012 and approximately $160 million in respect of 2013 to its pension plan to satisfy minimum funding  requirements. Contributions beyond 2013 will depend on investment returns, changes in benefits and actuarial assumptions and may include  additional voluntary contributions from time to time. Nevertheless, future contributions are expected to be significant. A determination by the  OEB that some of our pension expenditures are not recoverable from customers could have a material adverse effect on our company, and this  risk may be exacerbated as the quantum of required pension contributions increases.  Pension Plan Risk Labour Relations Risk  Workforce Demographic Risk Adjustments to accommodate these external dependencies have been made in our planning process, and we are focused on overcoming  these challenges to execute our work programs. However, if we are unable to carry out these plans in a timely and optimal manner, equipment  performance will degrade, which may compromise the reliability of the provincial grid, our ability to deliver sufficient electricity and/or customer  supply security, and increase the costs of operating and maintaining these assets. This could have a material adverse effect on our company. Asset Condition HYDRO ONE ANNUAL REPORT 2013 38