Hydro-Québec's annual profit plunges 28% amid drop in power exports

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Hydro-Québec said 2023 profit plunged 28 per cent as low water inflows and warmer weather depressed power exports.

Net income dropped to $3.29 billion from a record $4.56 billion a year earlier, Hydro-Québec said Wednesday in a statement. The utility will pay a dividend of $2.5 billion to its sole shareholder, the provincial government.

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“After an exceptional year in 2022, the company was faced with low runoff, a drop in energy prices and warmer temperatures in Québec,” Maxime Aucoin, executive vice-president of strategy and finance, said in the statement. “Despite these challenges, we still performed well on export markets, thanks in particular to the skilled implementation of marketing and risk-management strategies, resulting in a net income of over $3 billion for a third consecutive year.”

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Canada’s biggest hydroelectricity producer is three months into a 12-year, $185-billion plan to boost output, improve energy efficiency and slash power outages as demand in the province soars. At around $16 billion, the annual investment budget represents more than triple Hydro-Québec’s 2023 spending on property, plants and equipment of $4.9 billion.

Export revenue fell 19 per cent last year to $2.37 billion because of lower-than-average water levels, the company said. Electricity volumes slumped 35 per cent to 23 terawatt-hours, their lowest level in at least 10 years.

Hydro-Québec’s hedging strategy nevertheless allowed the company to pocket an average price of 10.3 cents per kilowatt-hour on export markets. That’s almost double the 5.2-cent market average for 2023.

Electricity sales within Quebec brought in $13.5 billion, 2.1 per cent more than in 2022. Higher electricity rates generated additional revenue of $471 million.

Operating expenses rose 7.1 per cent to $4.13 billion as Hydro-Québec stepped up servicing and maintenance work and spent more on digital services. The impact of the increased spending was partially offset by a drop in the current service cost of employee future benefit plans.

This report will be updated.

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