Income from continuing operations totaled $1,407 million for the first three months of the year, for an increase of $74 million compared to first quarter 2008. Net electricity exports by Hydro-Québec Production decreased by $84 million on account of a reduction in volume related to unavailability of generating capacity for export because of colder weather in Québec. The depreciation of the Canadian dollar, the positive effect of hedging aluminum prices and the decrease in financial expenses more than offset the drop in net exports.

With regard to discontinued operations, a non-recurring gain of $117 million related to the price adjustment provided for in the contract for the sale of the company’s interest in Transelec, in Chile, had been recognized in the first quarter of 2008, which is why net income for the first quarter, at $1,407 million, is down $43 million from 2008.

“The first quarter results are very satisfactory given the current economic context. As part of its risk management process, the company was able to take the necessary steps to minimize the impact of unfavorable market conditions,” said Lise Croteau, Vice President – Accounting and Control at Hydro-Québec.

Segmented results

Hydro-Québec Production posted net income of $868 million, compared to $862 million in 2008. Net electricity exports decreased by $84 million on account of a 1.4-TWh reduction in volume, mitigated by the depreciation of the Canadian dollar. This volume reduction led to a $13‑million decrease in transmission capacity reservation expenses. In Québec, the depreciation of the Canadian dollar and the positive effect of hedging aluminum prices resulted in a $41-million increase in income. Financial expenses decreased by $22 million.

Hydro-Québec TransÉnergie’s net income amounted to $128 million for the first quarter, compared to $119 million for the same period in 2008. Revenue from point-to-point transmission services decreased by $13 million, reflecting the reduction in the volume of exports by Hydro-Québec Production. However, financial expenses decreased by $22 million.

Hydro-Québec Distribution recorded net income of $417 million, compared to $353 million in 2008. The $135‑million increase in revenue from electricity sales was mitigated by a $59‑million increase in transmission costs and net electricity purchases because of very cold weather in January. The sales revenue increase was further mitigated by the $23‑million increase in the amortization expense for regulatory assets related to the retirement of property, plant and equipment. Financial expenses decreased by $14 million.

The volume of activity of Hydro-Québec Équipement and Société d’énergie de la Baie James (SEBJ) totaled $395 million, compared to $345 million in 2008. Major projects underway include the Eastmain-1-A/Sarcelle/Rupert hydroelectric development and the 1250-MW interconnection with Ontario.

Investments

In first quarter 2009, Hydro-Québec invested $689 million, compared to $641 million in the same period of 2008. Most of this amount went to the growth and development projects of Hydro-Québec Production, Hydro-Québec TransÉnergie and Hydro-Québec Distribution as well as to the continued implementation of the Energy Efficiency Plan.

Financing

In January 2009, two financings maturing on February 15, 2050, raised $1.0 billion. These financings were completed on the Canadian market at an average rate of 4.95%.