HYDRO ONE LIMITED Unaudited Pro Forma Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2018 and for the year ended December 31, 2017 June 8, 2018

Exhibit 4.7

HYDRO ONE LIMITED

Unaudited Pro Forma Condensed Consolidated Financial Statements

As at and for the three months ended March 31, 2018 and for the year ended December 31, 2017

June 8, 2018

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Hydro One Limited (“Hydro One” or the “Corporation”), Olympus Holding Corp., Olympus Corp. and Avista Corporation (“Avista”) entered into an agreement and plan of merger dated as of July 19, 2017 (the “Merger Agreement”). Pursuant to the Merger Agreement, Hydro One will indirectly acquire Avista (the “Merger”) for US$53 (approximately C$68 at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018) per Avista common share for an aggregate purchase price of approximately US$5,476 million (approximately C$7,056 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018), comprised of an equity purchase of approximately US$3,480 million (approximately C$4,484 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018) and the assumption of approximately US$1,996 million of Avista’s outstanding debt (approximately C$2,572 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018).

Since the acquisition is to be paid in U.S. dollars, the actual amount paid, when measured in Canadian dollars may vary with a change to the exchange rate. Hydro One has entered into a forward currency contract to partially mitigate the foreign exchange fluctuation risk.

The accompanying unaudited pro forma condensed consolidated financial statements give effect to the proposed acquisition by Hydro One of Avista under the acquisition method of accounting. The unaudited pro forma condensed consolidated balance sheet gives effect to the Merger as if it had closed on March 31, 2018. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2017 and the three months ended March 31, 2018 give effect to the Merger as if it had closed on January 1, 2017.

The following unaudited pro forma condensed consolidated financial statements are based on Avista’s historical unaudited consolidated financial statements as at and for the three months ended March 31, 2018 and audited consolidated financial statements for the year ended December 31, 2017 and Hydro One’s historical unaudited consolidated financial statements as at and for the three months ended March 31, 2018 and audited consolidated financial statements for the year ended December 31, 2017 and present the effects of the Merger on the combined historical financial statements of Hydro One and Avista. The unaudited pro forma condensed consolidated financial statements should be read together with the notes to the unaudited pro forma condensed consolidated financial statements and the historical financial statements of Hydro One and Avista.

The unaudited pro forma condensed consolidated financial statements (referred to herein as the pro forma financial information) are presented for illustrative purposes only and do not include, among other things, estimated cost synergies, adjustments related to restructuring or integration activities, further acquisitions or disposals not yet known or probable, or impacts of Merger-related change in control provisions that are currently not factually supportable and/or probable of occurring. The pro forma financial information has been prepared based upon available information and certain assumptions that Hydro One believes are reasonable in the circumstances, as described in the notes to the unaudited pro forma condensed consolidated financial statements.

Additionally, the pro forma financial information presented, including allocation of the estimated purchase price, is based on preliminary estimates of fair values of assets to be acquired and liabilities assumed. The actual amounts of acquired assets and assumed liabilities in the condensed consolidated financial statements upon the closing of the Merger will depend on a number of factors, including the impact of additional information available, foreign exchange rates and the amount of net assets of Avista on the closing date of the Merger. Therefore, the actual purchase adjustments will differ from those used to prepare the pro forma financial information, and the differences may be material. For example, the final purchase price allocation is dependent on, among other things, the finalization of asset and liability valuations. This final valuation will be based on the actual net tangible and intangible assets and liabilities of Avista that exist as of the closing date of the Merger. Any final adjustments may change the allocation of purchase price, which could affect the fair values assigned to the assets and liabilities, and may result in a change to goodwill, depreciation and amortization expenses and earnings per share.

The pro forma financial information is presented for informational purposes only and is not necessarily indicative of what Hydro One’s actual financial condition or results of operations would have been had the Merger been completed on the date indicated, nor does it purport to project Hydro One’s future financial position or results of operations for any future periods or as of any future date. Accordingly, the combined business, assets, results of operations and financial condition may differ significantly from those indicated.

Hydro One Limited

Unaudited Pro Forma Consolidated Balance Sheet

As at March 31, 2018

(millions of Canadian dollars) (unaudited)


	Hydro One Limited		* Avista Corporation		Adjustments			Note	Hydro One Limited Pro Forma Consolidated
Assets
Current assets:
Cash and cash equivalents		28		34		3,326		3 (C),(J)
						400		3 (C),(J)
						977		3 (B),(J)
						(4,484	)	3 (A),(J)
						(160	)	3 (D),(J)
						(30	)	3 (I)		91
Accounts receivable		588		217						805
Due from related parties		243								243
Other current assets		143		147						290

		1,002		398		29				1,429

Property, plant and equipment		20,069		5,693						25,762
Other long-term assets:
Regulatory assets		3,105		769		151		3 (H)		4,025
Deferred income tax assets		918				20		3 (B),(G)		938
Intangible assets		365								365
Goodwill		325		74		(74	)	3 (A)		2,617
						2,292		3 (A)
Other assets		5		133						138

		24,787		6,669		2,389				33,845

Total assets		25,789		7,067		2,418				35,274

*	Translated from US$ to C$. See Note 5

Hydro One Limited

Unaudited Pro Forma Consolidated Balance Sheet

As at March 31, 2018

(millions of Canadian dollars) (unaudited)

(Continued)


	Hydro One Limited			*Avista Corporation			Adjustments			Note	Hydro One Limited Pro Forma Consolidated
Liabilities
Current liabilities:
Short-term notes payable		989			64			400		3 (C)		1,453
Long-term debt payable within one year		981			354							1,335
Accounts payable and other current liabilities		911			444							1,355
Due to related parties		37										37

		2,918			862			400				4,180

Long term liabilities:
Long-term debt		9,085			1,988			3,326		3 (C)		14,550
								151		3 (H)
Convertible Debentures		488						(488	)	3 (B)
Regulatory liabilities		160			1,008							1,168
Deferred income tax liabilities		72			599							671
Other long-term liabilities		2,718			344							3,062

		12,523			3,939			2,989				19,451

Total liabilities		15,441			4,801			3,389				23,631

Noncontrolling interest subject to redemption		21										21
Equity
Common shares		5,631			1,458			1,502		3 (B)		7,133
								(1,458	)	3 (E)
Preferred shares		418										418
Additional paid-in capital		55						92		3 (B)
								7		3 (I)		154
Retained earnings		4,181			820			(17	)	3 (B)		3,875
								(92	)	3 (B)
								(37	)	3 (I)
								(820	)	3 (E)
								(160	)	3 (D)
Accumulated other comprehensive loss		(7	)		(12	)		12		3 (E)		(7	)

Shareholders’ equity		10,278			2,266			(970	)			11,573
Noncontrolling interest		49										49

Total equity		10,327			2,266			(970	)			11,622

Total liabilities and equity		25,789			7,067			2,418				35,274

*	Translated from US$ to C$. See Note 5

Hydro One Limited

Unaudited Pro Forma Consolidated Statement of Operations

For the three months ended March 31, 2018

(millions of Canadian dollars, except earnings per share) (unaudited)


	Hydro One Limited		** Avista Corporation		Adjustments			Note	Hydro One Limited Pro Forma Consolidated
Revenues
Distribution		1,145								1,145
Transmission		421								421
Utility revenues				509						509
Other		10		9						19

		1,576		518						2,094

Costs
*Purchased power		751		196						947
Operation, maintenance and administration		270		147		(3	)	3 (D)		414
Depreciation and amortization		197		57						254
Other expense (income)-net				6						6

		1,218		406		(3	)			1,621

Income before financing charges and income taxes		358		112		3				473
Financing charges		88		30		48		3 (B),(F)		166

Income before income taxes		270		82		(45	)			307
Income taxes		42		14		(9	)	3 (G)		47

Net income		228		68		(36	)			260

Basic earnings per share	$	0.37							$	0.38
Diluted earnings per share	$	0.37							$	0.38

*	Includes the cost of purchased natural gas for Avista Corporation

**	Translated from US$ to C$. See Note 5

Hydro One Limited

Unaudited Pro Forma Consolidated Statement of Operations

For the year ended December 31, 2017

(millions of Canadian dollars, except earnings per share) (unaudited)


	Hydro One Limited		** Avista Corporation			Adjustments			Note	Hydro One Limited Pro Forma Consolidated
Revenues
Distribution		4,366									4,366
Transmission		1,578									1,578
Utility revenues				1,848							1,848
Other		46		29							75

		5,990		1,877							7,867

Costs
* Purchased power		2,875		681							3,556
Operation, maintenance and administration		1,066		604			(39	)	3 (D)		1,631
Depreciation and amortization		817		223							1,040
Other expense (income)-net				(9	)						(9	)

		4,758		1,499			(39	)			6,218

Income before financing charges and income taxes		1,232		378			39				1,649
Financing charges		439		121			118		3 (B),(F)		678

Income before income taxes		793		257			(79	)			971
Income taxes		111		107			(23	)	3 (G)		195

Net income		682		150			(56	)			776

Other comprehensive income		1									1

Comprehensive income		683									777

Basic earnings per share	$	1.11								$	1.13
Diluted earnings per share	$	1.10								$	1.13

*	Includes the cost of purchased natural gas for Avista Corporation

**	Translated from US$ to C$. See Note 5

1.	DESCRIPTION OF THE ACQUISITION

Hydro One, Olympus Holding Corp., Olympus Corp. and Avista entered into an agreement and plan of merger dated as of July 19, 2017 (the “Merger Agreement”). Pursuant to the Merger Agreement, Hydro One will indirectly acquire Avista (the “Merger”) for US$53 (approximately C$68 at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018) per Avista common share for an aggregate purchase price of approximately US$5,476 million (approximately C$7,056 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018), comprised of an equity purchase of approximately US$3,480 million (approximately C$4,484 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018) and the assumption of approximately US$1,996 million of Avista’s outstanding debt (approximately C$2,572 million at the exchange rate of C$1.2884 = US$1.00 on March 31, 2018).

The accompanying pro forma financial information assumes that at closing, the Merger will be financed through the net proceeds from a C$1.54 billion common share equity issuance as further described below, with the balance funded through long-term debt as further described below.

The common share equity is assumed to be issued through the conversion of the 4% convertible unsecured subordinated debentures (“Debentures”) represented by instalment receipts that were issued by the Corporation on August 9, 2017 and that are convertible into common shares of Hydro One at a conversion price of C$21.40 per common share. Hydro One also proposes to issue long term debt in the amount of US$2.6 billion (approximately C$3.35 billion) maturing over 5, 10 and 30 years respectively.

The accompanying pro forma financial information assumes that the Debentures are issued and immediately converted in full into Hydro One common shares at the assumed closing date of the Merger. Therefore, the accompanying pro forma financial information does not recognize interest costs associated with the Debentures. Hydro One anticipates that the closing of the Merger will occur in the second half of 2018. As a result, the Company has included the cost of financing the Debentures as a pro-forma adjustment. Due to many factors, including the timing of regulatory approvals, the estimated closing period is subject to change which may change the amount of interest expense incurred on the Debentures and the related income tax recovery. Interest costs associated with the Debentures are expected to be funded through operating cash flows.

2.	BASIS OF PRESENTATION

The accompanying pro forma financial information gives effect to the proposed acquisition by Hydro One of Avista. The accompanying pro forma financial information has been prepared by management of Hydro One and is derived from the unaudited and audited consolidated financial statements of Hydro One as at and for the three months ended March 31, 2018 and for the year ended December 31, 2017, respectively, and the unaudited and audited consolidated financial statements of Avista as at and for the three months ended March 31, 2018 and for the year ended December 31, 2017, respectively.

The accompanying pro forma financial information uses accounting policies that are consistent with those disclosed in Hydro One’s and Avista’s audited consolidated financial statements as at and for the year ended December 31, 2017 and unaudited consolidated financial statements as at and for the three months ended March 31, 2018 and were prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”). The accompanying unaudited pro forma consolidated balance sheet and unaudited pro forma consolidated statements of operations reflect the Merger as if it had closed on March 31, 2018 and January 1, 2017, respectively. The accompanying unaudited pro forma consolidated financial statements may not be indicative of the results that would have been achieved if the transactions reflected therein had been completed on the dates indicated or the results which may be obtained in the future. For instance, the actual purchase price allocation will reflect the fair values, at the purchase date, of the assets acquired and liabilities assumed based upon Hydro One’s evaluation of such assets and liabilities following the closing of the Merger and, accordingly, the final purchase price allocation may differ materially from the preliminary allocation reflected herein.

The accompanying pro forma financial information should be read in conjunction with the description of the Merger and the proposed financing thereof contained in documents filed by Hydro One with the securities regulatory authorities in Canada; the most recent audited and unaudited consolidated financial statements of Avista, including the notes thereto; and the most recent audited and unaudited consolidated financial statements of Hydro One, including the notes thereto, all of which have been filed by Hydro One with the securities regulatory authorities in Canada.

Certain amounts in the historical financial statements of Avista have been reclassified in the unaudited pro forma balance sheet and statements of operations to reflect the presentation classifications in Hydro One’s consolidated financial statements. In addition the historical financial statements of Avista have been translated from U.S. dollars to Canadian dollars to conform to the presentation currency of Hydro One.

Management believes the underlying assumptions used for the preparation of the pro forma financial information provide a reasonable basis for presenting the significant financial effect directly attributable to the Merger. The pro forma adjustments used to prepare the pro forma financial information are tentative and are based on currently available financial information and certain estimates and assumptions. The actual adjustments to the consolidated financial statements will depend on a number of factors. Therefore, it is expected that the actual adjustments will differ from the pro forma adjustments used to prepare the pro forma financial information, and the differences may be material.

The pro forma financial information presents the combined effect on the historical statements and provides the following resulting information:


Historical Information of Hydro One and Avista	Historical Dates and Giving Effect	Resulting Information
Unaudited consolidated balance sheet	As of March 31, 2018	Unaudited pro forma condensed consolidated balance sheet, referred to as the unaudited pro forma balance sheet

Audited consolidated statement of operations for the year ended December 31, 2017 and unaudited consolidated interim statement of operations for the three months ended March 31, 2018	For the year ended December 31, 2017; and for the three months ended March 31, 2018	Unaudited pro forma condensed consolidated statement of operations, referred to as the unaudited pro forma statements of operations Fair value adjustments to net assets acquired at March 31, 2018 have been applied to the assumed Merger date of January 1, 2017 for purposes of the unaudited pro forma statements of operations (see note 3)

Amounts in the notes to the unaudited pro forma consolidated financial statements are stated in Canadian dollars, unless otherwise indicated. The accompanying pro forma financial information may not be indicative of the results that would have been achieved if the transactions reflected herein had been completed on the dates indicated or the results which may be obtained in the future.

3.	PRO FORMA ASSUMPTIONS AND ADJUSTMENTS

Pro forma Purchase Price and Purchase Price Allocation

At the date of preparation of this pro forma financial information, certain pro forma adjustments have been made as identified herein; however, the fair values of Avista’s identifiable assets and liabilities to be assumed and the full impact of applying acquisition accounting have not been fully determined. After reflecting the pro forma adjustments made herein, the excess of the purchase price consideration over the adjusted book values of Avista’s identifiable net assets has been presented as goodwill. The Merger consideration in the unaudited pro forma financial information is based on the agreed net purchase price of US $53 per share (approximately C$68 using the exchange rate of C$1.2884 = US$1.00 on March 31, 2018). Since the acquisition is to be paid in U.S. dollars, the actual amount paid, when measured in Canadian dollars will vary. The assumed financing structure and partial mitigation of the foreign exchange fluctuation risk is outlined below.

Avista is a public utility subject to regulation by state utility commissions. The retail electric and natural gas operations are subject to the jurisdiction of various regulatory bodies, including the U.S. Federal Energy Regulatory Commission (FERC) for licensing of hydroelectric generation resources, and for electric transmission services and wholesale sales. The revenues and earnings approved by the utility commissions are based on regulated rates of return that are applied to historic values of the regulated assets. Therefore, no fair value adjustments are expected to be made to property, plant and equipment and intangible assets with respect to the regulated entities of Avista because all economic benefits and obligations associated with regulated assets beyond regulated thresholds accrue to Avista’s customers.

The following is the estimated net purchase price, estimated net funding requirements and assumed financing structure for the Merger. These estimates have been reflected in the accompanying unaudited pro forma financial information.


	Using exchange rates in effect on March 31, 2018 (in millions of Canadian dollars)
Estimated Net Purchase Price
Estimated net purchase price, before assumed debt		4,484
Assumed debt of Avista		2,572

Estimated purchase price		7,056
Estimated Net Funding Requirements
Estimated net purchase price before assumed long-term debt		4,484
Assumed debt of Avista		2,572
Common share issuance costs and interest make whole payment (Note 3 (B))		77
Net interest (after tax) paid on convertible debentures (Note 3 (B))		26
Long term debt issuance costs (Note 3 (C))		24
Estimated (after tax) transaction costs (Note 3 (D))		160
Fair value of Avista share-based payments settled in cash (Note 3 (I))		30

Estimated net funding requirements		7,373
Assumed Financing Structure
Assumed debt of Avista		2,572
Gross proceeds from Convertible Debentures converted to common shares (Note 3 (B))		1,540
Issuance of long term debt (Note 3 (C))		3,350
(Excess) cash (Note 3 (J))		(89	)

		7,373

This estimated purchase price is based on Avista’s outstanding shares at the purchase price of US$53 per share converted at a foreign exchange rate of C$1.2884 = US$1.00 on March 31, 2018. The purchase price used for the purposes of calculating pro forma adjustments is based on exchange rates as described in Note 5 below and will differ from this amount when exchange rates change. Hydro One entered into a forward currency contract in October, 2017 to partially mitigate the foreign exchange fluctuation risk of the purchase price that is denominated in U.S. dollars.

Goodwill from the acquistion of Avista of C$2,292 is calculated as the difference between the net purchase price of C$4,484 million and the estimated fair value of the net assets acquired of C$2,192 million.

Assumed financing for the Merger contemplates the issuance, through the exercise of conversion rights under the Debentures, of approximately 72 million common shares of Hydro One at C$21.40 per share for gross proceeds of approximately C$1.54 billion, which includes a base offering of approximately 65 million common shares for proceeds of C$1.4 billion plus the over-allotment of approximately 7 million common shares that was exercised for proceeds of C$0.14 billion. Underwriting costs are 3.5% of gross proceeds in the aggregate which is approximately C$54 million and will result in a corresponding deferred tax asset of approximately C$14 million based on Hydro One’s Canadian statutory income tax rate of 26.5%.

Hydro One completed the sale of the Debentures on August 9, 2017 on an instalment basis. The initial instalment was paid with gross proceeds of C$513 million and net proceeds of C$486 million after payment of half the aggregate underwriter fees of C$27 million. The convertible debentures balance of C$488 million on the unaudited consolidated balance sheet of Hydro One as at March 31, 2018 is net of the unamortized debt issuance costs of C$25 million.

Upon conversion of the Debentures from the initial instalment and the issuance of all the common shares of approximately C$1.54 billion, as if the Merger had closed on March 31, 2018, the remaining underwriting fees, for an additional C$27 million and a make-whole interest payment of C$23 million would be paid in cash. The terms of the make-whole payment does not extend beyond the anniversary date of August 9, 2018 and therefore would not be incurred as an expense if the transaction closed after August 9, 2018.

Since the cash proceeds from the initial instalment were received on August 9, 2017, the pro forma adjustment to cash only reflects the incremental cash proceeds on March 31, 2018 of C$977 million, which is also net of the remaining underwriting fees as well as the make-whole payment. The pro forma adjustment to common shares of approximately $1.502 billion is net of the after tax underwriting fees of approximately $38 million and is reflected by the pro forma adjustment as incremental cash proceeds of C$977 million, the first instalment payment of $488 million, the recognition of a deferred tax asset of $20 million and a resulting impact to retained earnings of $17 million.

The Debentures contained a beneficial conversion feature at the time of issuance due to the conversion feature being in the money on the commitment date. The conversion feature is contingent on triggering of the final instalment payment at which time it becomes exercisable. Pro forma adjustment in the amount of C$92 million has been included to reflect the beneficial conversion feature, assuming the date for payment of the final instalment was the assumed Merger date of March 31, 2018.

Net interest costs since August 9, 2017 of C$36 million (and related tax effects of C$10 million) associated with the Debentures have already been paid and reflected in the historical financial results of Hydro One. Pro forma adjustments have been included with the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2017 and for the three months ended March 31, 2018 to remove the historical after tax interest costs incurred that reflect the assumed conversion of the Debentures into Hydro One common shares as if the Merger had closed on January 1, 2017.

Financing for the Merger includes the assumed issuance of long term debt maturing over 5, 10 and 30 years respectively for gross proceeds of approximately C$3.35B. Debt issuance costs in the aggregate of approximately C$24 million have been recognized as a direct deduction to the long term debt. The maturity dates and other terms of the debt are current estimates only and will not be known until the debt is issued and could vary significantly from what is proposed based on many factors including market conditions.

While assumed financing for the Merger is comprised of the Debentures and long term debt as previously described, the assumed Merger on March 31, 2018 is estimated to require short-term borrowing via issuance of commercial paper of approximately C$400 million, given the cash and cash equivalents balance on this date. This additional commercial paper issuance is expected to be termed-out subsequently, which is not reflected as an adjustment in the pro forma financial information.

Transaction costs not yet incurred are estimated at approximately C$120 million and are composed of estimated investment banking, advisory, accounting and legal fees, bridge financing costs, an Avista foundation donation that is considered to be directly related to the acquisition, and real estate transfer taxes. Change in control payments to employees are approximately C$50 million and represent estimated change in control liabilities as a result of the Merger. These transaction related costs and the change in control payments in aggregate of approximately C$170 million (after tax of C$160 million) and are assumed to be paid in cash based on estimates by Hydro One management. These costs have been included as a pro forma adjustment to cash and retained earnings on the unaudited pro forma balance sheet. They are not reflected in the unaudited pro forma statement of earnings on the basis that these expenses are directly attributable to the Merger of Avista and are non-recurring in nature.

Pro forma adjustments to the statement of earnings include removal of the non-recurring historical transaction costs from operation, maintenance and administration of C$39 million and C$3 million for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively.

Elimination of Avista’s historical outstanding common shares, retained earnings and accumulated other comprehensive income as of March 31, 2018.

Interest expense on the Company’s proposed issuance of long-term debt described in Note 3(C) above of C$143 million and C$35 million for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively.

Pro forma adjustments to finance charges includes removal of the historical net interest costs on the Debentures as described in Note 3(B) of C$22 million and C$14 million for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively.

In October, 2017, Hydro One also entered into a deal-contingent foreign exchange forward contract to convert C$1.4 billion to U.S. dollars at an agreed upon Canadian dollar forward rate per 1.00 U.S. dollars to economically mitigate a portion of the foreign exchange fluctuation risk on the purchase price that is denominated in U.S. dollars. Pro forma adjustments to finance charges includes removal of the associated loss from this hedging contract of C$3 million and the gain of C$27 million for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively.

Income taxes applicable to the pro forma adjustments for items with tax effect in the Canadian entities are calculated at the average tax rate of 26.50%. Income taxes applicable to the pro forma adjustments for items with tax effect in the U.S. entities are calculated at the average tax rates of 36.69% and 23.05% for the year ended December 31, 2017 and for the three months ended March 31, 2018, respectively.

Hydro One has recorded an adjustment to the fair value of Avista’s long term debt and recorded a regulatory offset of C$151 million in Regulatory Assets for the portion of the fair value adjustment to long-term debt held within regulated operations. Hydro One views the regulatory offset upon consummation of the acquisition as a proxy for the regulatory asset that would be recorded in the event such debt was extinguished at an amount higher than the carrying value.

As described in the Merger Agreement, Hydro One agreed to exchange certain of Avista’s outstanding share-based compensation awards partially settled as a cash payment and the remainder settled by conversion to equivalent Hydro One share-based compensation awards. Each award was measured at fair value on the date of the Merger with an aggregate value of C$37 million.

Excess cash of C$89 million is after accounting for the net cash proceeds of C$460 million (C$486 million net of the after tax interest payments of C$26 million) that is already reflected in the historical financial statements of Hydro One as described in Note 3(B). The aggregate pro forma adjustments to cash and cash equivalents of C$29 million on the unaudited pro forma consolidated balance sheet represents the excess cash of C$89 million, net of the C$460 million already received, plus the C$400 million of short term borrowing as described in Note 3 (C).

4.	PRO FORMA SHARES OUTSTANDING

Earnings per common share is calculated by dividing earnings attributable to common shareholders by the weighted average number of common shares outstanding.

The calculation of the pro forma earnings per common share, for the three months ended March 31, 2018 and for the year ended December 31, 2017, reflect the dilutive effects of the assumed conversion of the Debentures and the assumed issuance of approximately 2 million of Hydro One’s common shares arising from stock based compensation awards, as if the issuance of the common shares arising from outstanding stock based compensation awards had taken place on January 1, 2017. The basic and diluted earnings per common share and basic and diluted weighted average number of common shares outstanding for the pro forma reporting period is determined as follows:


	For the year ended December 31, 2017		For the three months ended March 31, 2018
(Canadian dollars; Number of shares in millions)
Earnings per common share	$	1.13	$	0.38
Diluted earnings per common share	$	1.13	$	0.38
Shares outstanding
Weighted average shares of Hydro One Limited - basic		595		595
Debenture converted common shares outstanding - basic		72		72
Pro forma weighted average shares outstanding – basic		667		667
Effect of dilutive options and other stock based compensation awards		2		2
Pro forma diluted weighted average shares of Hydro One Limited		669		669

5.	CURRENCY TRANSLATION AND CLASSIFICATION ADJUSTMENTS

The assets and liabilities of Avista, which has a US$ reporting and functional currency, are translated at the exchange rate of C$1.2884 = US$1.00 which was the rate published by Bloomberg as at March 31, 2018. Revenues and expenses in Avista’s statement of operations are translated to Canadian dollars using the rates published by Bloomberg at an average exchange rate of C$1.2648 = US$1.00 for the three months ended March 31, 2018 and C$1.2983 = US$1.00 for the year ended December 31, 2017.

Reclassifications were made to align the presentation of Avista’s financial statement amounts with Hydro One’s financial statement amounts in the accompanying unaudited pro forma financial information. No material differences in accounting policies under US GAAP have been identified; however, a more detailed analysis will be completed after the Merger.

Avista Corporation

Pro forma Consolidated Balance Sheet Reclassifications

As at March 31, 2018

Unaudited


	Avista Historical (USD)			Foreign Exchange Impact			Avista Historical (CAD)			Reclassifications (CAD)			Amount after Reclassification (CAD)
(in millions)
Assets
Current Assets:
Cash and cash equivalents		26			8			34						34
Accounts and notes receivable		169			48			217						217
Regulatory asset for energy commodity derivatives		21			6			27			(27	)			(1	)
Materials and supplies, fuel stock and stored natural gas		49			14			63			(63	)			(1	)
Other current assets		45			12			57			90			147	(1	)

Total current assets		310			88			398						398

Property, plant and equipment											5,693			5,693	(2	)
Net Utility Property:
Utility plant in service		5,882			1,697			7,579			(7,579	)			(2	)
Construction work in progress		165			48			213			(213	)			(2	)

Total		6,047			1,745			7,792			(7,792	)

Less: Accumulated depreciation and amortization		(1,629	)		(470	)		(2,099	)		2,099				(2	)

Total net utlity property		4,418			1,275			5,693			(5,693	)

Other Non-current Assets:
Regulatory assets											769			769	(3	)
Other assets											133			133	(4	)
Investment in affiliated trusts		12			3			15			(15	)			(4	)
Goodwill		58			16			74						74
Other property and investments-net and other non-current assets		92			26			118			(118	)			(4	)

Total other non-current assets		162			45			207			769			976

Deferred Charges:
Regulatory assets for deferred income tax		90			27			117			(117	)			(3	)
Regulatory assets for pensions and other postretirement benefits		206			60			266			(266	)			(3	)
Other regulatory assets		129			37			166			(166	)			(3	)
Regulatory assets for interest rate swaps		151			44			195			(195	)			(3	)
Non-current regulatory asset for energy commodity derivatives		9			3			12			(12	)			(3	)
Other deferred charges		10			3			13			(13	)			(3	)

Total deferred charges		595			174			769			(769	)

Total assets		5,485			1,582			7,067						7,067

1	Regulatory asset for energy commodity derivates plus materials, supplies, fuel stock and stored natural gas of $90 million to Other current assets

2	Net utility property of $5,693 million to Property, plant and equipment

3	Deferred charges of $769 million to Regulatory assets

4	Investment in affiliates trusts and other property and investments-net and other non-current assets of $133 million to Other assets

Avista Corporation

Pro forma Consolidated Balance Sheet Reclassifications

As at March 31, 2018

Unaudited

(Continued)


	Avista Historical (USD)			Foreign Exchange Impact			Avista Historical (CAD)			Reclassifications (CAD)			Amount after Reclassification (CAD)
(in millions)
Current liabilities:
Accounts payable		67			20			87			357			444		(5)
Current portion of long-term debt and capital leases		275			79			354						354
Short-term borrowings		50			14			64						64
Energy commodity derivative liabilities		10			3			13			(13	)				(5)
Income taxes payable		16			4			20			(20	)				(5)
Accrued interest		30			9			39			(39	)				(5)
Accrued taxes other than income taxes		45			13			58			(58	)				(5)
Deferred natural gas costs		31			9			40			(40	)				(5)
Current portion of pensions and other postretirement benefits		11			3			14			(14	)				(5)
Current unsettled interest rate swap derivative liabilities		25			7			32			(32	)				(5)
Current regulatory liability for excess deferred income taxes		26			8			34			(34	)				(5)
Other current liabilities		83			24			107			(107	)				(5)

Total current liabilities		669			193			862						862

Long-term debt and capital leases		1,491			431			1,922						1,922
Long-term debt to affiliated trusts		52			14			66						66
Long-term regulatory liabilities											1,008			1,008		(6),(7),(9)
Regulatory liability for utility plant retirement costs		288			83			371			(371	)				(9)
Pensions and other postretirement benefits		200			58			258			(258	)				(8)
Deferred income taxes		465			134			599						599
Regulatory liability for excess deferred income taxes		414			119			533			(533	)				(7)
Other non-current liabilities, regulatory liabilities and deferred credits		148			42			190			154			344		(6),(8)

Total liabilities		3,727			1,074			4,801						4,801

Equity:
Avista Corporation Shareholders’ Equity:
Common stock		1,132			326			1,458						1,458
Accumulated other comprehensive loss		(10	)		(2	)		(12	)					(12	)
Retained earnings		636			184			820						820

Total Avista Corporation shareholders’ equity		1,758			508			2,266						2,266

Total equity		1,758			508			2,266						2,266

Total liabilities and equity		5,485			1,582			7,067						7,067

5	Current liabilities of $357 million to Accounts payable and other current liabilities

6	Other non-current liabilties, regulatory liabilities and deferred credits of $104 million to Long-term regulatory liabilities

7	Regulatory liability for excess deferred income taxes of $533 million to Long-term regulatory liabilities

8	Pensions and other postretirement benefits of $258 million to Other long-term liabilities

9	Regulatory liablity for utility plant retirement costs of $371 million to Long-term regulatory liablities

Avista Corporation

Pro forma Consolidated Statement of Operations Reclassifications

For the three month period ended March 31, 2018

Unaudited


	Avista Historical (USD)			Foreign Exchange Impact		Avista Historical (CAD)			Reclasses (CAD)			Amount after Reclassification
(in millions)
Operating Revenues:
Other										9			9	(1)
Utility revenues		402			107		509						509
Non-utility revenues		7			2		9			(9	)			(1)

Total operating revenues		409			109		518						518

Operating Expenses:
Purchased power										196			196	(2)
Operating, maintenance and administration										147			147	(2)
Depreciation and amortization										57			57	(2)
Other expense										6			6	(4)
Utility operating expenses:
Resource costs		154			42		196			(196	)			(2)
Other operating expenses		78			21		99			(99	)			(2)
Depreciation and amortization		45			12		57			(57	)			(2)
Taxes other than income taxes		31			8		39			(39	)			(2)
Non-utility operating expenses:
Other operating expenses		7			2		9			(9	)			(2)

Total operating expenses		315			85		400			6			406

Income from operations		94			24		118			(6	)		112

Finance charges										30			30	(3)
Interest expense		25			6		31			(31	)			(3)
Capitalized interest		(1	)				(1	)		1				(3)
Other expense (income)-net		4			2		6			(6	)			(4)

Income before income taxes		66			16		82						82

Income tax expense		11			3		14						14

Net income		55			13		68						68

1	Non-utility revenues of $9 million to other revenue

2	Utility operating expenses and non-utility operating expenses of $400 million to operating expenses

3	Net interest of $30 million to finance charges

4	Other expense (income)-net of $6 million to operating expenses

Avista Corporation

Pro forma Consolidated Statement of Operations Reclassifications

For the year ended December 31, 2017

Unaudited


	Avista Historical (USD)			Foreign Exchange Impact			Avista Historical (CAD)			Reclassifications (CAD)			Amount after Reclassification
(in millions)
Operating Revenues:
Other											29			29		(1)
Utility revenues		1,423			425			1,848						1,848
Non-utility revenues		23			6			29			(29	)				(1)

Total operating revenues		1,446			431			1,877						1,877

Operating Expenses:
Purchased power											681			681		(2)
Operating, maintenance and administration											604			604		(2)
Depreciation and amortization											223			223		(2)
Other income-net											(9	)		(9	)	(4)
Utility operating expenses:
Resource costs		525			156			681			(681	)				(2)
Other operating expenses		332			100			432			(432	)				(2)
Depreciation and amortization		17 1			51			222			(222	)				(2)
Taxes other than income taxes		107			32			139			(139	)				(2)
Non-utility operating expenses:
Other operating expenses		25			8			33			(33	)				(2)
Depreciation and amortization		1						1			(1	)				(2)

Total operating expenses		1,161			347			1,508			(9	)		1,499

Income from operations		285			84			369			9			378

Finance charges											121			121		(3)
Interest expense		95			29			124			(124	)				(3)
Interest expense to affiliated trusts		1						1			(1	)				(3)
Capitalized interest		(3	)		(1	)		(4	)		4					(3)
Other expense (income)		(7	)		(2	)		(9	)		9					(4)

Income before income taxes		199			58			257						257

Income tax expense		83			24			107						107

Net income		116			34			150						150

1	Non-utility revenues of $29 million to other revenue

2	Utility operating expenses and non-utility operating expenses of $1,508 million to operating expenses

3	Net interest of $121 million to finance charges

4	Other expense (income) of $9 million to operating expenses

HYDRO ONE LIMITED Unaudited Pro Forma Condensed Consolidated Financial Statements As at and for the three months ended March 31, 2018 and for the year ended December 31, 2017 June 8, 2018

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