Hydro-Québec posts $2.8-billion profit in 2016

Public utility attributes earnings to growing exports, cost-cutting measures

Hydro-Québec posted a net profit of $2.861 billion in 2016, making it the fourth highest grossing year in the public utility’s history.

The earnings, however, also represented Hydro- Québec’s lowest haul in the past four years. Last year’s numbers represent a 9 per cent drop since 2015 and a 14 per cent dip since its record-setting year of $3.325 billion in profits in 2014.

Higher-than-average winter temperatures — which helped customers cut back on their heating bill — and dropping prices on the energy markets were among the factors that drove down profits.

“We’re extremely proud of this result, as a team, because even in our predictions at the beginning of the year, when we made our budget, we didn’t think we’d hit that number given market conditions,” said Éric Martel, the CEO of Hydro-Québec.

Martel announced the results on Wednesday.

The profits beat the utility’s predictions by $311 million, which Hydro-Québec attributes to growing electricity exports and cost-cutting measures it achieved through reducing its staff. The company cut 455 jobs, mostly through attrition, last year.

Energy prices on the export market dropped from $0.06 per kilowatt-hour in 2014 to $0.048 in 2016.

A one cent per kilowatt-hour reduction costs the company $300 million in profits, according to Hydro- Québec.

The drop, however, was mitigated in part by a record increase of its export volume to a total of 32 terawatt-hours per year. Exports account for 16 per cent of the public utility’s sales — about $803 million in profits last year.

Hydro-Québec’s revenue also dropped because it had to buy energy produced by private wind energy farms, which cost the company a net loss of $200 million. When the push for more wind energy infrastructure demand began in the 2000s, Martel said it was done with the thought that Quebec’s energy demands would only continue to grow.

But since 2007, there hasn’t been an increase in demand — which Martel says is a highly unusual phenomenon in the company’s history.