Hydro-Québec’s net profit fell by more than half in the third quarter while dry weather forced the state-owned company to reduce its exports.
Hydro-Québec’s net profit reached $363 million in the third quarter, according to its results published Monday. This is a decrease of 58% compared to the same period last year.
The sales volume outside Quebec fell by nearly 64%, or 6.8 terawatt hours (TWh), to stand at 4 TWh during this period, which represents a missed opportunity of $557 million.
Weather conditions were unfavorable for large reservoirs in northern Quebec. Snow cover was light in late winter, spring freshet was lower than normal and summer precipitation was lower in the region.
The difficulties of 2023 have not just revealed a risk that Hydro-Québec could lack electricity to respect its major export contracts with New York and Massachusetts, assures the chief financial officer, Jean-Hugues Lafleur, in press conference.
Mr. Lafleur specified that the state-owned company planned to sell approximately 30 TWh annually outside Quebec after the entry into force of the two contracts. With the two contracts representing 20 TWh, this would provide a margin of maneuver of 10 TWh for exports on the wholesale market. “We sold, over the first nine months of the year, 19 TWh. So, we would have been able to satisfy our contracts,” replies Mr. Lafleur.
Hydro-Québec’s multi-annual reservoirs also allow it to plan its production over time by taking into account energy needs and the vagaries of the weather, continues the manager. “We plan to ensure that we will be able to respect our future commitments, that’s always how we do it: two, three years in advance. We have this advantage. »
He also adds that there will be no shortage of electricity in Quebec. “In terms of risk management, this is something that we ensure at all times, that there will be no shortage of energy in Quebec. »
In the longer term, Hydro-Québec predicts that climate change will not have a lasting adverse impact on water availability. “The warmer the temperature, the more temperate the temperature will be in northern Quebec, which means that there will be more water input, around 10% more water. »
“It’s unfortunate,” he concedes, “but climate change means that we should normally benefit from more, more energy. »
An exceptional year 2022
Hydro-Québec presented the 2023 results in a favorable light, specifying that the comparison is with the year 2022, an “exceptional” year.
For the first nine months of 2023, Hydro-Québec posted a net profit of $3.05 billion, a decrease of $554 million compared to last year.
The year 2022 was marked by a cold winter. The company thus posted a record net profit for the comparable period of the first nine months of the year. “The net profit for the first three quarters crossed $3 billion for only the second time in the history of Hydro-Québec,” explains the finance chief.
Hydro-Québec also specifies that it spent $136 million to improve the quality and reliability of service in the third quarter. This amount has reached $436 million since the start of the year.
In the third quarter, Hydro-Québec issued $900 million worth of bonds at an interest rate of 4.5% maturing in 2063. Despite the recent rise in interest rates on world markets, the rate of new issues remains below the average rate, i.e. “around 5%”, on the entire debt of the state company.