Due in particular to the impacts of the pandemic on households and businesses, Hydro-Québec has seen its profits melt like snow in the sun by $ 433 million since January, compared to 2019. The Crown corporation was also forced to increase its provisions for bad debts.
Hydro-Quebec unveiled the financial results for its second quarter of 2020 on Friday, when its net income reached $ 80 million. This is a 70% plunge, compared to this period in 2019.
Since January, Hydro – Québec’s net income has stood at $ 1.6 billion. The management of the electricity supplier has never hidden, in recent months, that the pandemic was going to have significant impacts on its finances.
During the recent study of budget appropriations, management even announced that it was forecasting a drop in profits of $ 600 million this year. As of June 30, the impacts of COVID-19 were already estimated at $ 300 million.
“The current crisis has disrupted our commercial and financial performance, as evidenced by our half-year results,” said Jean-Hugues Lafleur, Executive Vice-President and Chief Financial Officer.
“We are indeed seeing a decline in our electricity sales, both in Quebec and outside Quebec, and have had to postpone several investments,” he continues.
Hydro-Québec expects to continue to suffer the impacts of COVID-19. Several companies have chosen to rely on teleworking for the coming months. In addition, the Crown corporation still does not disconnect households unable to pay their electricity bill.
$ 145 million decrease in Quebec
Hydro-Québec recently, among other things, had to increase its provision to mitigate the risk of non-recovery of certain receivables by $ 35 million. The envelope is now $ 125 million. The number of payment agreements signed with customers has risen to 66,000 since March 13, but management believes the losses could come more from the business side.
Since January, net sales in Quebec have fallen by $ 145 million.
During the second quarter, marked by the closure of businesses, the demand for electricity in the commercial, institutional and small industrial sector fell by 11%. As for large industrial customers, the drop was 12%. Residential consumption, however, climbed 5%.
Exports also down
As for sales outside Quebec (14.7 TWh), the pandemic led to a decrease in demand of 1.7 TWh from Ontario (-7%), New England (-4%) and New York State (-7%).
Since January, exports have fallen by $ 158 million to $ 647 million. The average selling price of electricity also had an impact on the crown corporation’s profits, as it fell to 4.4 ¢ / kWh, from 4.9 ¢ / kWh a year earlier.
In addition, the electricity supplier mentions to explain its results that at the beginning of the year, Quebeckers benefited from milder temperatures, ie 3 ° C higher than those of 2019. This also had an influence on consumer bills.
First semester
- Net profit: 1,6 G$ (-433 M$)
- Quebec market: decrease of $ 145 million
- Market outside Quebec: decrease of $ 158 million
Other factors, such as the decrease in the number of working hours capitalized in the cost of investment projects, the increase in the provision linked to the risk of non-recovery, the effect of the decrease in the discount rate ( retirement plan) and the abandonment of the Northern Pass Transmission project in 2019: decrease of $ 130 million
Source: Hydro-Quebec
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