Hydro-Québec reports record net income in 2021 thanks to robust recovery

The economic recovery of 2021 has allowed Hydro-Quebec to not only make up for lost ground in 2020, but even surpass its pre-pandemic results.

The financial results released Thursday by the utility show a record net income of $3.546 billion, up 55 per cent from the $2.303 billion achieved in 2020. The 2020 results were severely hampered by the pandemic, but the 2021 recovery was so robust that it propelled Hydro-Quebec to unprecedented heights.

This performance enabled the Crown corporation to pay the highest dividend in its history to the government, $2.673 billion.

“We managed to do everything right: the economy was there, the demand in Quebec was there, the demand in the U.S. markets was there, and the water conditions were good," summarized Sophie Brochu, Hydro’s president and CEO, during a virtual conference.

Executive vice president Jean-Hugues Lafleur also said that several long-term loans had matured, allowing them to be renewed at lower interest rates, and that the aluminum sector had collected an additional $115 million due to the sharp rise in its price. Aluminum smelters’ electricity bills fluctuate with the price of aluminum, and while a metric ton was selling for $1,500 in 2020, the average price was $2,500 per metric ton in 2021, and is now as high as $3,400.

After having to curb its investments in 2020, the investment program totaled $4.2 billion in 2021, compared to $3.4 billion a year earlier.

THE IMPACT OF WEATHER

Lafleur said only one factor hurt the corporation’s performance: the weather.

“The weather was the offsetting factor, in fact it was the only negative factor in 2021, mainly because of the mild temperatures in the second quarter. Had it not been for these temperatures, the profit would have been about a hundred million higher.”

On this subject, Sophie Brochu was reassuring about this year’s winter.

“It’s cold this winter and everyone who was not on equal payments has seen the impact of this on their bill and it’s not small. If people have problems, they call Hydro, we make an agreement. There is no service cut-off,” she said.

INCREASE IN EXPORTS

Hydro-Quebec has benefited not only from the province’s economic recovery, but also from its export markets. In Quebec, its net electricity sales reached an all-time high of 175.2 TW/h, representing a gain of $444 million, mainly due to the recovery in demand from business customers. This performance would have been even stronger had Quebec not experienced mild temperatures in the spring of 2021.

In export markets outside Quebec, sales volume reached 35.6 TW/h, the second best performance in its history, resulting in an increase of $333 million over 2020 for a total of $1.658 billion. Exports alone account for 17 per cent of the utility’s net sales volume and helped boost net income by $865 million, up more than 60 per cent from 2020.

Favourable market conditions enabled the company to achieve an average price of 4.7 cents per KW/h in export markets, compared to 4.2 cents the previous year.

ORGANIZATIONAL OVERHAUL

In presenting its financial results, Hydro also announced it was “implementing a new organizational structure that will maximize collaboration and agility across the company.”

“We’re going to operate cross-functionally. It starts on Monday [Feb. 28], and it will take months and months of installation. It’s a big cultural evolution,” Brochu said, noting that Hydro’s three traditional divisions — generation, transmission and distribution — will be treated as a whole.

— This report was first published in French by The Canadian Press on Feb. 24, 2022.