HydroQuebec net profit more than $3 billion

Due diligence of NB Powers assets exposed conditions and costs that HydroQuebec was not ready to assume, Thierry Vandal said during a news conference after speaking to the Montreal Board of Trade.

He said significant elements emerged during the due diligence process that could not be considered and were not anticipated at the outset.

You turn the page, Vandal told reporters.

New Brunswicks Liberal government recently cancelled the deal after a storm of protest in the province.

HydroQuebec reported that it earned more than $3 billion for 2009, $106 million less than in 2008 when it gained $129 million from the sale of assets in Transelec, a Chilean utility.

Its profits would have sharply dropped had the utility not protected itself against the fluctuating loonie along with fall aluminum and energy prices.

Vandal said the giant governmentowned utility would have instead earned $2.44 billion.

The utility paid the cashstrapped Quebec government a dividend of nearly $2.2 billion.

Revenue from electricity sales fell to just under $12.1 billion from nearly $12.4 billion in 2008.

In Quebec, the companys revenue from electricity sales rose $104 million to about $10.5 billion, reflecting higher rates and the impact of lower demand from industry.

As well, revenue from special contracts with large industrial customers such as Rio Tinto Alcan was down due to a decrease in aluminum prices, offset by hedging contracts on aluminum prices and exchange rates.

In markets outside Quebec, revenue from electricity sales fell to $1.5 billion from $1.9 billion, mainly because of a drop in energy prices in 2009 when the Canadian and U.S. economies were mired in recession.

Following a speech to the Montreal Board of Trade, Vandal assured that higher exports and reduced costs rather than special rate increases will pay for the additional burden placed on HydroQuebec to generate increased government payments during the provincial budget.

In breaking down its operations, the utility reported:

• HydroQuebec Production earned net profits of $2.2 billion for 2009, just under what it earned in 2008 as revenues fell because of lower demand from industrial customers in Quebec and reduced exports.

Net electricity exports decreased 15.2 per cent to $1.26 billion, from $1.48 billion in 2008. This was primarily caused by lower average prices, which fell to 6.8 cents per kWh in 2009, from 9.8 cents in 2008.

Although they account for 10 per cent of sales volume, exports generated 22 per cent of Hydros net earnings. In 2008, exports were responsible for 32 per cent of profits despite being just 8.2 per cent of the volume.

• HydroQuebec Distributions net income reached $365 million, down from over $388 million generated in 2008. TransEnergies profits grew by $9 million to $435 million.

HydroQuebec is Canadas largest electricity generator and the worlds largest producer of hydroelectric power. The company has 59 hydro plants and one nuclear generating station and employed 23,345 people at the end of 2008.