Hydro-Québec Doubles Profits | The press

The general increase in energy prices due to the war in Ukraine had a positive impact on the development of Hydro-Québec, which doubled its profit in the second quarter compared to the same period last year.

Posted yesterday at 11am

Helen Barill

Helen Barill
The press

The state-owned company posted net income of $680 million in the second quarter, up $328 million from April, May and June last year.

This increase in profit is mainly due to the increase in the price per kilowatt exported to the US market, which is linked to the price of natural gas. Gas prices have risen sharply since Russia invaded Ukraine, especially in Europe but also in the US.

Hydro-Quebec achieved an average price of 7.2 cents per kilowatt hour exported compared to 4.6 cents in the previous year. As the water levels in the reservoirs are sufficient and prices in the American market are expected to remain high in the coming months, exports will continue to be very profitable, said Jean-Hugues Lafleur, Hydro-Québec’s executive vice president and chief financial officer.

Hydro-Québec has not suffered from the general drought that has hampered several hydropower producers in other parts of the world, even in northern countries like Norway.

Hydro-Québec’s net income was also boosted by the 2.6% tax hike effective Jan. 1ah April. In addition, the rise in aluminum prices in international markets has benefited the company, whose price is linked to the metal price for part of its sales to aluminum smelters.

The May storm, known as the Derecho, eroded the company’s earnings by $55 million. This is the worst weather event on the power grid since the 1998 ice storm, Mr Lafleur said on a conference call.

Record year in sight

Overall, Quebec sales reported gains 201 million higher than in the second quarter of last year and exports added another 268 million.

Electricity sales and net profit reached an all-time high in the first half of the year.

Hydro-Québec reported net income of $2.7 billion at the halfway point for the fiscal year, up $749 million, or 38%, from the first six months of last year. Full-year profit target of 3.4 billion expected to be exceeded.

“I can say with some certainty that we will have a record year,” said Jean-Hugues Lafleur.

The cold recorded in January 2022, the worst since 2004, helped improve the half-year result. In January, the average temperature was -14°C compared to -7°C in the previous year.

In addition, Hydro-Québec is beginning to feel the impact of rising interest rates on the financial markets. Since the beginning of the year, the state-owned company has borrowed $2.9 billion at an average interest rate of 4%, or 1 point higher than last year. “At 4%, that’s still an acceptable rate for the large projects we carry out,” commented Jean-Hugues Lafleur.

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