Hydro-Québec profits, revenues decline

Hydro-Québec exported record volumes of hydro-electricity during the summer, but the loonie’s instability vis-à-vis the U.S. dollar was a drag on its profits.

In the third quarter ended Sept. 30 — the period in which demand is generally lower in Quebec — the Crown corporation’s net income decreased by 9.7 per cent to $306 million.

“Profits in excess of $300 million is an important achievement,” said Lise Croteau, executive vice-president and chief financial officer of Hydro-Québec, during a conference call. Our profitability is related to exports during this period.”

The foreign exchange impact on working capital denominated in U.S. dollars increased financial expenses by $26 million. The Canadian dollar depreciated by one cent against the greenback in the third quarter, compared with a decline of nine cents in the same period in 2015.

On the other hand, summer heat prompted many Americans in Vermont, New Hampshire, New York and Massachusetts to use more air conditioning, thereby stimulating exports, offsetting lower prices in the markets.

Croteau highlighted the “historic high” of 9.8 terawatt hours (TWh), a volume 15 per cent higher than the same period last year.

“We know that the summer quarter is still good for exports because air conditioning needs can be significant,” said Croteau. Our neighbours to the south had a good summer. “

With its hedging strategy, Hydro-Québec was able to obtain 4.1 cents per kilowatt-hour (kWh), compared to the market price of 3.8 cents per kWh. This is, however, lower than the price of 4.8 cents per kWh achieved in the third quarter of 2015.

Overall, the Crown corporation’s quarterly sales remained essentially flat at $2.74 billion, a decline of 2.1 per cent.

“Outside of Quebec, sales were similar, at about $400 million,” explained Croteau. The increase in volume offset the decline in market prices.”