Annual Report 2012

Message from the President and Chief Executive Officer

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A Commendable Performance
In 2012, Hydro-Québec posted a result from continuing operations of $2.7 billion. This performance, which surpasses the 2011 result and the projections in the Strategic Plan 2009-2013, is all the more satisfying given the particularly difficult business conditions the company faced this past year.

In Québec, demand was down in the industrial sector. In addition, we had to buy a significant amount of surplus hydropower from Rio Tinto Alcan because of an increase in its excess output following a labor dispute at one of its large aluminum smelters.

On markets outside Québec, electricity prices tracked those of natural gas, which declined due to the combined effect of two factors: heavy production of shale gas in the United States and relatively slow economic growth continent-wide. Revenue from sales outside Québec nevertheless rose as a result of the strong performance of our generating and transmission facilities—which allowed us to increase the volume of our exports—and the skillful execution of our sales programs.

We continued to make efficiency gains in 2012, enabling us to both reduce our operating expenses and absorb cost increases due to inflation, salary indexation and growth of our operating assets.

It is also noteworthy that our Québec customers benefited from a 0.45% rate reduction, effective April 1, 2012—the second consecutive yearly rate cut.


The year began with the commissioning of the third and final generating unit at Eastmain-1-A powerhouse (768 MW). Sarcelle powerhouse (150 MW), which is part of the same project, will follow suit in 2013. The Eastmain-1-A–Sarcelle–Rupert project is a great success story. Originally budgeted at $5.0 billion when it was launched in 2007, this complex undertaking will come in under budget, an accomplishment that attests to Hydro-Québec's skill in managing major infrastructure projects. At the $6.5-billion Romaine complex, construction of the retaining structures at Romaine-2 passed some important milestones in 2012. In addition, we finished excavating the 5.5-km headrace tunnel and erected the structure and exterior walls of the generating station. Scheduled commissioning: end of 2014. Downstream, excavation began on the site of Romaine-1 generating station, with commissioning slated for 2016. Upstream, construction of the road and facilities required for work to get under way at Romaine-3 and Romaine-4 is proceeding as planned.

At the end of December, Gentilly-2 nuclear generating station ceased operation, which led to the posting of a negative result of some $1.9 billion from discontinued operations. However, this accounting treatment had no impact on cash flows from Hydro-Québec's operating activities.


In 2012, we continued our work on transmission system expansion, which is necessary to keep pace with native-load growth, integrate new output and carry increasing volumes of inter-regional power flows. Our main transmission projects are in the Minganie, Capitale-Nationale and Montréal regions. At the same time, we bolstered the capacity of a number of links that are essential to the smooth operation of the power system.


Asset sustainment is imperative for the long-term security and reliability of the electricity supply. In 2012, we invested $560 million in refurbishing or optimizing major components of the generating fleet. One example is the refurbishment of the generating units at Robert-Bourassa, the world's largest underground hydropower facility, which will go on until 2020. Additionally, we devoted $735 million to our transmission grid—the most extensive in North America. These investments have a twofold objective: ensure compliance with North American standards and regulatory requirements, and provide our customers with top-quality service.


The Régie de l'énergie, having noted the advantages of an advanced metering infrastructure and accepted the rationale we presented, approved phase one of our remote meter reading project, which calls for the rollout of 1.7 million next-generation meters and data transmission equipment in the greater Montréal area between 2012 and 2014. These meters will allow us to record customers' power consumption without having to access their premises and will facilitate certain frequently performed operations, such as those related to moving. Ultimately, we plan to deploy 3.75 million next-generation meters throughout the province. This project will enable us to replace the current generation of meters, which have reached the end of their life cycle, while enhancing the company's operating efficiency and improving customer service.


Our performance testifies to the steadfast effort and commitment of the women and men who work for Hydro-Québec or its partners. Because of them, we are able to offer clean, reliable, affordable electricity all over the province, while maintaining a solid financial performance that benefits Québec as a whole. They have my sincere gratitude. I also want to thank the members of the Board of Directors for their contribution to Hydro-Québec's achievements.


Hydro-Québec at a glance. Note: Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.
  2012 2011
Operations and Dividend ($M)  
Revenue 12,228 12,245
Operating result 5,177 5,214
Result from continuing operations 2,736 2,686
Result from discontinued operationsa (1,876) (75)
Net result 860 2,611
Dividend 645 1,958
Balance Sheets ($M)  
Total assets 70,517 69,637
Property, plant and equipment 57,174 56,901
Long-term debt, including current portion and
     perpetual debt


Equity 18,982 18,834
Cash Flows ($M)  
Operating activities 4,768 5,161
Investing activities (3,321) (3,683)
Financing activities (639) (185)
Cash and cash equivalents 2,183 1,377
Financial Ratios  
Interest coverage 2.03 2.00
Return on equity from continuing operations (%) 14.6 15.5
Profit margin from continuing operations (%) 22.4 21.9
Capitalization (%) 30.6 31.4
Self-financing (%) 54.5 49.0

a) The discontinued operations are related to the decision made in 2012 to abandon the project to refurbish Gentilly-2 nuclear generating station and terminate nuclear power operations.

Hydro-Québec is innovating The Annual Report is now available exclusively in electronic formatDownload  [PDF – 8.71 MB]

Earlier annual reports

  • 2011  [PDF – 5.53 MB]
  • 2010  [PDF – 6.5 MB]
  • 2009 [PDF – 6.1 MB]
  • 2008 [PDF – 7.2 MB]

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