Hydro-Québec’s net income exceeds $2 billion for the first six months

Hydro-Québec posted net income of $2,038 million for the first six months of 2019, compared to $2,267 million a year earlier. Excluding the non-recurring gain of $277 million on the sale of an equity interest in subsidiary TM4 in June 2018, net income increased by $48 million over the first half of 2018.

“We’re very pleased with our results for the first two quarters,” commented Jean-Hugues Lafleur, Executive Vice President and Chief Financial and Risk Officer. “Greater electricity needs in Québec this past winter propelled our total net sales volume to a historic high for the first half of the year. Moreover, through our efforts to maximize efficiency, we were able to lower our operational expenditure by $18 million.”

These results factor in a $46-million charge resulting from the writeoff of certain costs related to the Northern Pass Transmission (NPT) project. This project, which involved the construction of a transmission line in New Hampshire to export electricity to Massachusetts, was permanently shelved by Hydro-Québec’s U.S. partner.

Even though it didn’t go through, NPT positioned Québec hydropower as an option of choice to ensure a clean energy future in northeastern North America. As a case in point, Massachusetts selected another Hydro-Québec project to replace it, namely the New England Clean Energy Connect (NECEC), which runs through Maine.

Highlights for the first six months

Markets outside Québec

Export volume exceeded 16 TWh for a third consecutive year
Increase in the average export price obtained (4.9¢/kWh)

Québec market

Higher baseload demand (excluding the impact of temperatures) across all customer segments
Temperatures colder in winter 2019 than in the previous winter

Operational expenditure

Decrease of $18 million compared to the first half of 2018
Careful management made it possible to completely absorb the higher costs related to inflation and salary indexing

Completion of the 735-kV Chamouchouane−Bout-de-l’Île project

Commissioning of most of the facilities during the second quarter of 2019
One of Hydro-Québec’s largest jobsites of the past decade, completed under budget
Infrastructure will help meet growing demand in southern Québec while ensuring the reliability of the entire grid

Financing activities

Two fixed-rate bond issues maturing in 2055 during the second quarter, at an average cost of 2.68%, for proceeds of $1.3 billion
Total amount raised since the beginning of the year: $1.9 billion

On markets outside Québec, Hydro-Québec Production’s net electricity exports surpassed 16 TWh, but declined by $30 million compared to the first half of 2018, primarily because demand was lower on export markets during the second quarter as a result of temperature variances. The impact of the volume decrease was mitigated by an increase in the average price obtained, mainly on account of the positive impact of the company’s risk management strategy.

On the Québec market, electricity supplies provided by Hydro-Québec Production to Hydro-Québec Distribution rose by $119 million compared to the first six months in 2018. This growth is due to a higher volume of electricity sales, particularly in the first quarter.

Finally, Hydro-Québec invested $1,513 million in property, plant and equipment and intangible assets in the first two quarters of 2019, compared to $1,509 million in the same period last year. Work progressed on the construction and connection of the Romaine hydroelectric complex. In addition, the company completed the 735 kV Chamouchouane−Bout-de-l’Île project. The facilities, most of which were commissioned during the second quarter, were inaugurated in July 2019. Hydro-Québec also carried on with its investments to ensure the reliability and long-term operability of its generating, transmission and distribution assets.

For more information:

Maxence Huard-Lefebvre
Hydro-Québec
Tel.: 514 289-5005
Financial results