Financial results 2011: Hydro-Québec reports steady progress

Net income: $2,611 million
Dividend: $1,958 million
Investments: $3.8 billion
Regional spinoffs: $2.7 billion
Energy savings since 2003: 6.2 TWh

Hydro-Québec posted net income of $2,611 million in 2011, a $96?million increase over the previous year. These earnings are well in excess of the $2,400 million projected in the Strategic Plan 2009–2013.

“Hydro-Québec’s profitability grew significantly in 2011,” said Thierry Vandal, President and Chief Executive Officer of Hydro-Québec. “We are very proud of this performance, which is the result of rigorous management and the commitment of all our employees.”

The dividend paid to the Québec government for 2011 will amount to $1,958 million.

Segmented results

Hydro-Québec Production recorded net income of $1,690 million, up $85 million over 2010. Net electricity exports grew despite the appreciation of the Canadian dollar and the decline of energy prices on markets in northeastern North America. Normal precipitation levels across the entire hydroelectric generating fleet permitted an increase in the volume of net sales outside Québec. In contrast, 2010 had been marked by precipitation levels well below the historic mean, limiting the volume of net exports. Sales to Hydro-Québec Distribution also increased due to colder temperatures in winter 2011 compared to 2010. However, these items were mitigated by an increase in depreciation and amortization expense as well as higher water-power royalties.

Hydro-Québec TransÉnergie’s net income amounted to $435 million, compared to $447 million in 2010.

Hydro-Québec Distribution posted net income of $374 million, compared to $453 million in 2010. Revenue from electricity sales rose on account of colder temperatures in winter 2011 and higher demand in the residential sector. However, this rise was offset by the impact of the variance accounts, such as the account for revenue variances related to climate conditions, and by an increase in electricity purchases.

In the Construction segment, work handled by Hydro-Québec Équipement et services partagés totaled $1,833 million in 2011, compared to $1,927 million in 2010. Large-scale projects carried out for Hydro-Québec Production included construction of the Romaine?2 hydroelectric development, while work performed for Hydro-Québec TransÉnergie revolved around connecting new generating facilities and continued investment in asset sustainment projects, among other things. The volume of activity of Société d’énergie de la Baie James amounted to $289 million, compared to $680 million a year earlier. The Eastmain?1?A/Sarcelle/Rupert project reached an important milestone in 2011 with the commissioning of two generating units at Eastmain?1?A powerhouse.

In the area of technological innnovation, Hydro-Québec’s granting of sublicences for the use of lithium metal phosphates in the manufacture of rechargeable batteries had a positive impact on the 2011 results.

Investments

Hydro-Québec invested $3.8 billion in 2011, compared to $4.2 billion in 2010. Of this total, $1.8 billion was invested in development projects and $1.8 billion in maintaining or improving asset quality, while $0.2 billion went to the Energy Efficiency Plan.

Financing

In 2011, Hydro-Québec’s financing activities raised $4.6 billion on the Canadian and global markets. The proceeds were used to support part of the investment program and to refinance maturing debt.

For more information about Hydro-Québec’s 2011 financial statements, visit www.hydroquebec.com/ar