Low water levels in Hydro-Québec’s reservoirs forced the state-owned company to reduce its exports, which caused its net profit to fall by $500 million in the third quarter.
Hydro-Québec’s net profit was 363 million for the months of July, August and September 2023, down 499 million compared to the same period last year, when profits reached a quarterly record, at 862 million.
The level of exports is currently at its lowest level in ten due to the drop in water levels in large reservoirs, explained Jean-Hugues Lafleur, executive vice-president and chief financial officer of Hydro-Québec. .
“This low hydraulicity has had no impact on Quebec’s energy supply and the long-term commitments made with neighboring markets,” he said. However, we have restricted sales of electricity to external markets in order to manage our resources optimally, which has resulted in a reduction in revenues from sales outside Quebec. »
Export volume is down 32% from last year. The little snow that fell last winter, the low spring flood and the low summer precipitation reduced the water level in the reservoirs.
This low hydraulicity is not a cause for concern for Hydro-Québec. “Long-term studies predict an increase in water supply,” explained Mr. Lafleur. It’s unfortunate, but climate change means we will have more energy.”
Despite a drop in the price of electricity in its export markets, Hydro-Québec obtained an average price of 10.3 cents per kilowatt hour exported. This is twice as much as the average market price of 5.2 cents per kilowatt hour, a result that can be explained by the risk hedging strategy.
For the first nine months of 2023, Hydro-Québec posts a net profit of 3 billion, down 554 million compared to the same period last year.
In addition to falling exports, rising network upkeep and maintenance expenses weighed on profitability.
Electricity sales in Quebec are down compared to 2022, due to the last winter which was milder than normal. In January 2023, the average temperature was 9 degrees Celsius higher than in January 2002, according to Hydro-Québec.
Sales revenue in Quebec is still slightly up, at 9.8 billion, due to the increase in prices and the profitability of special contracts linked to the price of aluminum.
