Financial results for 2016: net income of $2,861 millionHydro-Québec records its fourth highest income ever thanks to record exports

Hydro-Québec's financial results for 2016

Éric Martel, President and Chief Executive Officer of Hydro-Québec, and Lise Croteau, Executive Vice President and Chief Financial Officer, today announce the company’s results for 2016. Given a record volume of exports, Hydro-Québec’s net income remained high, at $2,861 million, in a context marked by lower prices on energy markets and a return to near-normal temperatures on the Québec market.

Profitable exports despite lower energy prices

“Hydro-Québec had a successful year despite lower energy prices and mild temperatures,” noted Mr. Martel. “We are proud of our performance, which enables us to contribute over $4 billion to the Québec government’s revenue. This achievement is all the more remarkable given that we maintained the electricity rates paid by our residential customers the lowest in North America and our overall customer satisfaction index reached 91% in 2016, up from 82% in 2015.”

2016 highlights

Exports reach a historic high of 32.6 TWh:

- Volume increase of over 10% compared with 2015

- A 1.8-TWh increase over the previous record, set in 2013

- Contribution of $803 million to net income

Economic spin-offs created by Hydro-Québec’s operations:

- Contribution to the Québec government’s revenue: over $4 billion

- $2.9 billion in net income, $0.7 billion in water-power royalties, $0.3 billion in public utilities tax, and $0.2 billion in guarantee fees related to debt securities

- Investments throughout Québec: $3.5 billion

- Purchases of goods and services in Québec: $2.8 billion

Main jobsites:

- Construction and connection of the Romaine hydroelectric complex

- The 735-kV Chamouchouane–Bout-de-l’Île project

Financing:

- Issuance of medium-term notes and variable-rate notes for a total amount of $2 billion and maturing in 2019

Consolidated Results

In 2016, Hydro-Québec posted net income of $2,861 million, compared to $3,147 million in 2015. Hydro-Québec Production’s net electricity exports decreased by $77 million because of lower prices on energy markets, the impact of which was offset by a volume increase of 3.3 TWh. On the Québec market, the return to near-normal temperatures in 2016 led to a $63-million decrease in supplies provided by Hydro-Québec Production to Hydro-Québec Distribution. Finally, financial expenses increased by $83 million, essentially on account of the marked depreciation of the Canadian dollar in 2015, which had resulted in the recognition of a significant exchange gain.

Exports

Net electricity exports rose by 3.3 TWh compared to 2015, reaching a historic high of 32.6 TWh. This high volume—all the more remarkable given the unavailability of a major power transmission link between Québec and New England in April and May 2016 due to scheduled maintenance—was made possible by the smooth operation of generating and transmission facilities as well as high runoff and favorable weather conditions. These factors, combined with the skillful development and deployment of the sales strategy, enabled the company to take advantage of business opportunities on external markets.

“Exports account for 16% of net electricity sales, but represent 28% of net income,” noted Ms. Croteau. “They contributed $803 million to net income, which is an excellent return in a context where market conditions were less favorable than last year.”

Investments

Hydro-Québec’s investment program totaled $3,460 million in 2016, mainly because of the continuation of major projects in the generation and transmission segments.

The largest project under way was still the construction and connection of the Romaine hydroelectric complex in the Côte-Nord region. A new milestone was reached in September with the completion of the dam at Romaine-3 (395 MW), slated for commissioning in 2017. As part of this major project, Romaine-1 generating station (270 MW) was completed in 2015 and Romaine-2 (640 MW) was completed in 2014.

Work also went forward on the 735-kV Chamouchouane–Bout-de-l’Île. After clearing began in fall 2015, the project continued in 2016 with the launch of construction at Judith-Jasmin substation in Lanaudière, among other things. Work will be stepped up in 2017 in view of a 2018 start-up.

For more information on Hydro-Québec’s 2016 financial results, visit www.hydroquebec.com/ar.

For information:

Geneviève Chouinard
Hydro-Québec
514 289-5005