Hydro-Québec’s net profit and the dividend paid to the Quebec government fell by more than a quarter in 2023, while exports declined due to low water levels.
The state-owned company revealed Wednesday that its net profit fell by $1.3 billion, or 27.8%, in 2023 to $3.3 billion. She highlighted that the net profit was higher than the average of the last 10 years.
The dividend paid to the Quebec government, for its part, fell by a quarter, going from $3.4 billion in 2022 to $2.5 billion in 2023.
In 2023, the low hydraulicity in its reservoirs forced Hydro-Québec to reduce its exports. The winter of 2023 was also milder in Quebec. The icy conditions last spring also caused major breakdowns. “In our opinion, the story of 2023 is really a story of weather,” explained its president and CEO, Michael Sabia, at a press conference.
Mr. Sabia also attributes the decline in profit to the comparison with the “exceptional year” 2022. “The year 2022 was a fairly remarkable year, marked by record energy sales, the coldest winter, and therefore a lot of demand and the highest prices in history on the American markets,” he emphasizes.
“So, this combination of factors in the markets in 2022 was unprecedented and something exceptional that we will not see again for a long time,” added the CEO
At a press scrum in Quebec, the Minister of Economy and Energy, Pierre Fitzgibbon, said that he was not afraid that hydraulicity would be structurally inferior due to climate change. “These are not Quebec’s forecasts at the moment. It changes continuously, but today there is no reason to worry. »
Exports down
In 2023, Hydro-Québec exports decreased by 35% compared to the same period last year. The reduction in prices on international markets was, however, offset by the use of derivatives. Sales outside Quebec thus had an unfavorable impact of $547 million on net profit.
By using derivative products, Hydro-Québec managed to mitigate the effect of falling energy prices in the United States. It achieved an average price of 10.3 cents per kilowatt hour (¢/kWh) for its exports in 2023, while the average market price was 5.2¢/kWh.
Vice-president of strategy and finance, Maxime Aucoin, acknowledged that this protection would not be as great next year. “It is certain that there, we will hedge against prices in 2023 which were still much lower. So I would tell you [que] the great advantage of having covered the very high prices of 2022, we experienced it especially in 2023.”
In Quebec, price indexation had a favorable impact of $471 million on the state-owned company’s sales. The milder winter of 2023, however, eroded revenues by 349 million compared to the previous year.
Hydro-Québec’s operating costs increased by $288 million due, in particular, to the increase in upkeep and maintenance work as well as technological expenses.
Hydro-Québec also saw the value of its 20% stake in renewable energy producer Innergex depreciate by $248 million. The stock has lost almost half its value over the past year.