Hydro-Québec posts net result of $3.38 billion for 2014

Contribution of markets outside Québec up more than 30%

Rapport annuel 2014

Hydro-Québec posted a net result of $3,380 million for 2014, a $438-million increase over 2013 attributable to the company’s strong performance on all its markets, combined with sound management of operating expenses.

“We are proud of this 15% increase in our profitability,” said Thierry Vandal, President and CEO of Hydro-Québec. “Thanks to the efficiency of our generating, transmission and distribution assets, our net result broke the $3.3-billion mark, for the benefit of all Quebecers. Markets outside Québec contributed $814 million to our bottom line, an increase of more than 30% compared to 2013. I would like to highlight the sustained efforts of all Hydro-Québec employees, whose expertise, professionalism and determination are the cornerstones of our success.”

The dividend that will be paid to the Québec government for 2014 amounts to $2,535 million.

Results from continuing operations ($M)

Consolidated operations

The increase in the net result is mainly due to more favorable market conditions in 2014, especially early in the year, when intense cold gripped North America. Thanks to the skillful deployment of its sale programs and the solid performance of its generating and transmission facilities, the company was able to capitalize on higher export market prices, which led to a rise in Hydro-Québec Production’s net electricity exports. On the Québec market, this division provided peak supplies to Hydro-Québec Distribution at market prices, which also contributed to the company’s higher result. Moreover, through targeted initiatives at every level of the organization, Hydro-Québec was able to reduce its operating expenses in 2014 and again fully absorbed the impact of inflation and salary indexing as well as the expenses related to the growth in operating assets.

Segmented operations

Hydro-Québec Production posted a net result of $2,298 million in 2014, a $368-million increase over 2013. On the one hand, net electricity exports rose to $1,529 million, a $176-million increase due mainly to more favorable market conditions in 2014. On the other hand, electricity sales to Hydro-Québec Distribution totaled $5,085 million, a $195-million increase that is primarily attributable to the peak supplies Hydro-Québec Production provided in Québec during the first few months of the year.

Hydro-Québec TransÉnergie’s net result was $624 million in 2014, a $111-million increase compared to the $513 million recorded in 2013 that is partly due to a $180-million increase in revenue from native-load transmission service. Depreciation and amortization expense rose by $51 million, mainly because of the commissioning of property, plant and equipment as well as an increase in net costs related to the retirement of capital assets.

Evolution of assets in operation and operating expenses, 2010-2014 ($M)

Hydro-Québec Distribution recorded a net result of $341 million in 2014, compared to $410 million in 2013, a decrease of $69 million. Revenue from electricity sales, excluding special contracts, increased by $563 million because of two main factors: temperatures that were colder in 2014 than in 2013, and the rate adjustments of April 1, 2013 and 2014. In addition, the change in the net amounts that Hydro-Québec is entitled to receive from customers or is required to pay to them in connection with such things as variances in supply costs for electricity in excess of the heritage pool and revenue variances related to climate conditions had a positive impact of $76 million on other revenue. Electricity purchases and transmission costs, excluding special contracts, increased by $734 million, mainly on account of a $436-million rise in electricity purchases made by Hydro-Québec Distribution from third parties, primarily independent wind power producers, as well as short-term market purchases to meet ad hoc requirements resulting from the very cold winter of 2014. Supplies from Hydro-Québec Production increased by $195 million. Moreover, depreciation and amortization expense increased by $23 million over 2013.

In the Construction segment, the volume of activity at Hydro-Québec Équipement et services partagés and Société d’énergie de la Baie James totaled $2,281 million in 2014, compared to $2,574 million the previous year. Among other projects carried out for Hydro-Québec Production, the division continued construction of the Romaine complex, which reached a milestone at year end with the commissioning of Romaine-2 generating station (640 MW). It also conducted refurbishment work at several facilities. Work handled for Hydro-Québec TransÉnergie included connecting the Romaine complex, integrating wind farm output, as well as various projects stemming from continued investment in asset sustainment and reliability.

Investments

Hydro-Québec invested $3.9 billion in 2014, compared to $4.3 billion in 2013. Most of this amount was allocated to the company’s growth and development projects as well as to maintenance and improvement activities.

Financing

In 2014, Hydro-Québec’s financing activities raised $1.5 billion on the Canadian market. The proceeds were used to support part of the investment program and to refinance maturing debt.
For more information on Hydro-Québec’s 2014 financial statements, visit www.hydroquebec.com/ar.

Information:

Serge Abergel
Hydro-Québec
514 289-5005
abergel.serge@hydro.qc.ca