Net income totaled $3,141 million for 2008, up 8% over 2007. The $234-million increase was mainly the result of higher net electricity exports by Hydro-Québec Production. In 2008, these exports, which accounted for 8.2% of sales volume, generated 32% of income from the company’s continuing operations.

“2008 was a good year for Hydro-Québec: increased exports and higher export prices, an additional gain of $126 million resulting from a price adjustment related to the sale of our Chilean assets in 2006, and effective management throughout the company enabled us to earn more than $3 billion in net income and pay a $2,252‑million dividend to the Québec government,” said Lise Croteau, Vice President, Accounting and Control at Hydro-Québec.

Consolidated results

Revenue totaled $12,717 million in 2008, up 3%. Revenue from electricity sales rose by $379 million to reach $12,364 million.

In Québec, revenue from electricity sales amounted to $10,445 million, compared to $10,368 million in 2007. The $77-million increase was attributable to rate adjustments, mitigated by the effect of milder temperatures in 2008 than in 2007 and by a decrease in demand, particularly in the industrial category.

On markets outside Québec, revenue from electricity sales totaled $1,919 million, up $302 million as a result of a 3.6-TWh increase in the volume of exports by Hydro‑Québec Production and highly favorable market conditions.

Total expenditure amounted to $7,260 million, up $324 million over 2007. This increase stems mainly from the higher amortization expense for the regulatory assets and liabilities of Hydro-Québec Distribution arising from variances in transmission and electricity procurement costs and a $285-million increase in water-power royalties paid by Hydro-Québec Production. These items were partially offset by a reduction in electricity purchases in excess of the heritage pool by Hydro-Québec Distribution.

Operating expenses were down $44 million or 1.7%, chiefly due to a decrease in pension costs and to company-wide efficiency gains.

Segmented results

Hydro-Québec Production posted net income of $2,137 million, a year-over-year increase of $60 million. Net electricity exports rose by $380 million, while water‑power royalties were up $285 million. It should be noted that in 2007, a transition year, the half-rate rule applied to water-power royalties.

Hydro-Québec TransÉnergie’s net income was $481 million in 2008, compared to $396 million in 2007. This rise is partially attributable to an $18-million increase in revenue from point-to-point transmission services due to higher exports. It should also be noted that a $50-million regulatory liability was recorded in 2007, resulting in a positive variance of $50 million in 2008.

Hydro-Québec Distribution recorded net income of $421 million, up $26 million. An $85-million increase in revenue from electricity sales and a $222‑million reduction in net electricity purchases exceeding the heritage pool and in transmission costs were offset by a $343-million increase in amortization expense for regulatory assets and liabilities arising mainly from variances in transmission and electricity procurement costs.

Regulatory deferrals amounted to $71 million in 2008, compared to $21 million in 2007, for a positive impact of $50 million.

The volume of activity at Hydro-Québec Équipement and Société d’énergie de la Baie James (SEBJ) totaled $2,416 million, as against $2,150 million in 2007. Major projects under way include the Eastmain-1-A/Sarcelle/Rupert hydroelectric development and the 1,250-MW interconnection with Ontario.

Investments

In 2008, Hydro-Québec invested $4.0 billion, compared to $3.6 billion in 2007. Most of this amount was devoted to the growth and development projects of Hydro‑Québec Production, Hydro-Québec TransÉnergie and Hydro‑Québec Distribution, as well as the continued implementation of the Energy Efficiency Plan.

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