Newfoundland and Labrador Hydro records profit for 2021, first quarter 2022
Newfoundland and Labrador Hydro released its annual business and financial report Wednesday showing profit and progressive results for 2021 and the first quarter of this year.
Delays in finalizing software to get the Labrador Island Link (LIL) operating at full capacity, however, still keeps final commissioning of the entire Muskrat Falls project out of the reach of Hydro’s oars.
However, Hydro rowed to a profit for the year ended Dec. 31, 2021 of $72 million compared to a loss of $90 million in 2020 — an increase of $162 million.
A news release notes the key driver of the increase relates to the non-cash impairment of oil and gas assets recorded in Q1 2020. Also contributing to the increase was the commissioning of the Muskrat Falls assets in 2021 and associated regulatory deferrals, higher realized oil and electricity export prices, and a settlement with Hydroquébec in relation to the declaratory judgment case.
And in the first quarter of this year, Hydro recorded a profit for the three months ended March 31, 2022 of $100 million compared to a loss of $57 million for the same period in 2021. The key drivers of the increased profit for the quarter relate to the commissioning of the Muskrat Falls assets and associated regulatory deferrals.
“In June 2021, we emerged with a new organizational structure, one designed to better meet the expectations of the people of the province,” Jennifer Williams, president and CEO, Newfoundland and Labrador Hydro, said at Tuesday’s annual general meeting.
“While this change affected every part of the company, it did not change our core purpose — we remain proud to be Newfoundland and Labrador’s Crown utility. Our company and our people are on a journey to ensure we are not only responsive and accountable to the people of the province but also to ensure we are adapting to our rapidly changing energy industry.”
An update earlier this month from Hydro showed that the overall price tag of the Muskrat Falls project went up by $256 million bringing the total cost of the project to $13.37 billion — up from the previously reported $13.11 billion in September 2020.
The increased cost was attributed to delays in getting the LIL software running properly.
How a delayed LIL is impacting Hydro’s overall performance, Williams said that will be determined in the future.
“It’s complicated to say what the impact would be, but if you project ahead a period of time, and we are going to be able to capitalize on all the market opportunities, you’ll be able to offset (Holyrood thermal generating station) in a more material fashion,” Williams said. “I think (the LIL) is going to continue to be working through this period of time. And we are working to get that completed this year. Our team is working incredibly hard on that.
“While there have been challenges along the way, and there may be more, we are making progress. Muskrat Falls is producing. We are delivering power over the LIL to island customers, as well as to Nova Scotia and beyond. We continue to work with (General Electric Canada) to advance the software required to appropriately operate the LIL at varying levels. Yes, it’s frustrating for the people we serve. It’s frustrating for us and we have work to do over the coming months. But we want customers to know that we prioritize operating this system reliably and will continue to do so over the fall and winter.”