December 22, 2015 "Hydro Ottawa and Hydro One operate in a heavily regulated industry. Approval from the regulator, the Ontario Energy Board would be a requirement to effect any transfer or sale of customers from one utility to another. As part of any purchase/transfer process, the Ontario Energy Board, would need to be satisfied that the transfer of these customers meets their statutory objectives - a primary one being to protect the interests of consumers with respect to prices. Acquiring these customers at a price that would satisfy this “no harm” test would be financially irresponsible on the part of Hydro Ottawa. Conversely, disposing of or agreeing to sell these Hydro One customers to Hydro Ottawa below this price would be rejected by the Ontario Energy Board as potentially causing “harm” to existing Hydro One customers."

1. Hydro Ottawa Limited / Hydro Ottawa limitée
3025 Albion Road North, PO Box 8700 / chemin Albion Nord, C.P. 8700
Ottawa, Ontario K1G 3S4
www.hydroottawa.com
1
December 22, 2015 via email
His Worship Mayor and City Council
City of Ottawa
110 Laurier Avenue West
Ottawa, Ontario
K1P 1J1
Dear Mayor Watson and Council,
Re: Hydro One
In June of this year, the Chair of Hydro Ottawa and I met with the Chair of Hydro One and their
Chief Executive Officer/President in Ottawa to discuss the long-standing issue of acquiring the
existing Hydro One customers with the City of Ottawa limits. That meeting took place as a result
of the joint efforts of the Minister of Energy, Bob Chiarelli and our Mayor. At our most recent
Annual General Meeting before City Council, the Chair of Hydro Ottawa, Mr. Jim Durrell, provided
a verbal update on the meeting and the next steps, as well as a commitment to keep our
shareholder informed as to the status of the discussions.
Since that meeting, senior officials from both Hydro Ottawa and Hydro One, including the CEOs,
have met and exchanged detailed financial data and models. Several options were presented
and discussed. Unlike previous efforts to acquire these customers, Hydro One staff were very
open and transparent with their financial information and the modelling that underpinned their
valuation. While the process and the final valuation remains covered by a confidential non-
disclosure agreement, Hydro Ottawa is prepared to acknowledge that the valuation placed on
these customers by Hydro One is both valid and defensible. Unfortunately, and with regret, we
are unable to conclude a commercial agreement with Hydro One to acquire these 45,000
customers in the outlying areas of the City of Ottawa.
Hydro Ottawa and Hydro One operate in a heavily regulated industry. Approval from the
regulator, the Ontario Energy Board would be a requirement to effect any transfer or sale of
customers from one utility to another. As part of any purchase/transfer process, the Ontario
Energy Board, would need to be satisfied that the transfer of these customers meets their
statutory objectives - a primary one being to protect the interests of consumers with respect to
prices. Acquiring these customers at a price that would satisfy this “no harm” test would be
financially irresponsible on the part of Hydro Ottawa. Conversely, disposing of or agreeing to sell
these Hydro One customers to Hydro Ottawa below this price would be rejected by the Ontario
Energy Board as potentially causing “harm” to existing Hydro One customers.

2. Hydro Ottawa Limited / Hydro Ottawa limitée
3025 Albion Road North, PO Box 8700 / chemin Albion Nord, C.P. 8700
Ottawa, Ontario K1G 3S4
www.hydroottawa.com
2
While we are disappointed with this outcome, I can assure the shareholder that every effort was
made over the past 6 months to correct and remedy this historical mistake. At this time, I would
like to sincerely thank both the Mayor and the Minister of Energy for facilitating this last effort to
acquire these customers on a commercial basis. Hydro Ottawa remains committed to providing
best in class service to our existing customers in a cost-effective and reliable manner and to
growing our renewable energy generation business.
Should you have any questions or wish to arrange a briefing on this matter, please do not
hesitate to contact me at 613-738-5499 ext. 203.
Sincerely,
Bryce Conrad
President and Chief Executive Officer/Président et chef de la direction
Tel. / tél. 613-738-5499 | ext. / poste 203
Fax / Téléc.: 613 738-5498
bryceconrad@hydroottawa.com
cc: Kent Kirkpatrick, City Manager, City of Ottawa
Jim Durrell, C.M., Chair, Board of Directors