Montréal, February 22, 2023
Hydro-Québec’s contribution to Québec society reaches a new summit
In a presentation on its financial results for 2022, Hydro-Québec announced that it has posted the best financial performance in its history. In a context marked by a sharp increase in energy prices on export markets and cold winter temperatures in early 2022, net income totaled $4,557 million, compared to $3,564 million a year earlier. This $993-million increase is mainly due to higher sales revenue, both in and outside Québec.
“Hydro-Québec ended 2022 in a strong position, not only from a financial standpoint but also with regard to the many significant milestones we reached during the year, including the tabling of our Strategic Plan, which was nourished by the ideas of our fellow citizens,” commented Hydro-Québec’s President and Chief Executive Officer, Sophie Brochu. “I would like to highlight the outstanding work of our employees—experienced women and men whose rigor, innovative spirit and unflagging devotion allow us to dream big as we move toward our objective of decarbonizing the economy while creating wealth for all Québec communities,” added Ms. Brochu.
“The year that just ended was remarkable in more ways than one,” noted Jean-Hugues Lafleur, Executive Vice President and Chief Financial Officer. “In particular, soaring prices on our export markets contributed to the nearly $1-billion increase in our net income. In light of these unprecedented results, Hydro-Québec will be able to pay a dividend of $3,418 million to the Québec government, its sole shareholder—the largest ever.”
- Hydro-Québec makes its largest contribution yet to the Québec government’s revenue:
- Contribution of $6.0 billion, an increase of $1.1 billion compared to 2021
- Sharp rise in energy prices drives up sales outside Québec:
- Export revenue of nearly $3 billion, up nearly 60%
- Increase in the average selling price: 8.2¢/kWh, compared to 5.0¢/kWh a year earlier
(including hedging effect)
- Export volume remained high: 35.6 TWh
- Cold winter contributes to unprecedented sales volume on the Québec market:
- Record of 180.6 TWh, an increase of 5.4 TW
- Cold winter temperatures in early 2022
- January 2022: Coldest month of January since 2004
- Increase in electricity demand in most customer segments
- Extreme weather events cause extensive damage:
- Derecho in May and winter storm with unusually violent wind gusts in December: over half a million customers lost power in both cases
- Total service restoration costs in 2022: $126 million (the highest amount since the 1998 ice storm)
- Costs covered by Hydro-Québec: no impact on electricity rates
- The company continues its major investment program across Québec:
- Close to $4.3 billion invested in every region of the province, including $3 billion allocated to asset sustainment
- The biggest construction project of the last decade has been completed:
- Romaine complex now fully operational after the commissioning of the last unit at Romaine-4 generating station in September
On markets outside Québec, electricity sales generated revenue of $2,912 million, an increase of $1,086 million. This was mainly due to favorable market conditions during the year, given the sharp rise in prices on global energy markets in 2022. More specifically, the economic recovery and the energy crisis in Europe stemming from the conflict in Ukraine drove up natural gas prices, which led to an increase in electricity prices in the U.S. Northeast where gas-fired electricity generation is prevalent. The result was that the annual average for electricity prices in New England, Hydro-Québec’s main export market, nearly doubled in comparison to 2021. This situation led to much higher revenue from sales outside Québec, which was partially offset by the effect of the risk management strategy put in place by the company to mitigate price volatility. Export volume remained at a level comparable to that of 2021, or 35.6 TWh. The strength of economic activity, combined with favorable weather conditions, especially during the summer, led to sustained demand on external markets.
In Québec, electricity sales brought in $912 million more than in 2021, due to several factors. First, temperatures led to an increase of 3.0 TWh or $258 million. Their effect was mainly felt in January, when they were 7°C lower, on average, than in 2021. Second, baseload demand rose by 2.4 TWh or $202 million as a result of growth in energy consumption in most segments, especially among residential customers and in the commercial, institutional and small industrial segment. Lastly, the increase in aluminum prices drove up electricity sales by $211 million, while the indexation of rates as of April 1, 2021 and 2022, had a positive impact of $239 million.
Electricity purchases rose $665 million due to three factors: an increase in short-term supplies purchased on the markets to meet Québec’s ad hoc requirements during the cold spells at the beginning of the year; higher transmission costs related to sales outside Québec, partly due to the sharp spike in energy prices on the markets; and a higher supply volume, resulting in part from the coming into force of new power purchase agreements.
In 2022, Hydro-Québec invested $4.3 billion in property, plant and equipment and intangible assets, compared to $4.2 billion in 2021. Most of this amount was allocated to large-scale asset sustainment initiatives and major development projects.
The largest projects include the ongoing construction of the 735-kV line that will connect Micoua substation, in the Côte-Nord region, to Saguenay substation, in the Saguenay–Lac-Saint-Jean region. The line, which will run 262 km, will help maintain the reliability and improve the operational flexibility of Hydro-Québec’s transmission system and reduce electrical losses associated with the distances covered. The new equipment is expected to be commissioned in 2023.
In a context marked by rising interest rates, Hydro-Québec carried out a number of fixed-rate issues on the Canadian capital market during the year, which raised a total of $5.0 billion: $2.3 billion in medium-term notes maturing in 2028, at an average cost of 3.15%, and $2.7 billion in bonds maturing in 2060 and 2063, at an average cost of 3.95%.
For more information on Hydro-Québec’s 2022 financial results, visit www.hydroquebec.com/ar.
Caroline Des Rosiers
Tel.: 514 289-5005