The historically low level of reservoirs will reduce the dividends paid by Hydro-Québec to the State.
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The Daniel Johnson dam of the Manic-5 power station is supplied by the Manicouagan reservoir which has suffered a sharp drop in its level water in recent months.
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A record deficit in water supply in Hydro-Québec reservoirs causes a shortfall of one billion dollars in the coffers of the Quebec government, reveal data from the Ministry of Finance and an internal report from the state corporation, obtained by Radio-Canada.
The report, dated December 31, reveals that the state-owned company suffered, in 2023, a first major negative energy shock since it accumulated surpluses. This record deficit in hydraulicity (water supply) is unheard of since the data was compiled in 1943.
According to Hydro-Québec calculations, 35 terawatt hours (TWh) disappeared from energy reserves last year, which qualifies as an enormous energy deficit.
35 TWh, this is the equivalent of:
No one is to blame, it is the dry weather in the north of the province which has considerably reduced the level of tanks.
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The problem focused mainly on two hydroelectric complexes: La Grande, in Nord-du-Québec (-30.7 TWh) and Manic, on the North Shore (-5.4 TWh).
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The Manic-5 power station, the Manic-5-PA power station and the Daniel-Johnson dam are part of the vast Manic aux outardes complex.
The report describes a sad weather picture in which there was a lack of a lot of snow last winter, and a lot of rain in the spring, in Nord-du-Québec and the Côte-Nord. Then, the summer was abnormally dry (we remember the forest fires in the north). Finally, there was no autumn flood, due to the light rain.
To the lowest spring flood in history […] was therefore added a starving autumn which beats the previous historical record 1943-2022, which was 1985.
A quote from Hydro-Québec's internal report
In September, Hydro-Québec had already warned that it would reduce its exports by due to low reservoir levels. We were then talking about a drop in energy reserves of 20 TWh. But we did not know that the situation would continue to deteriorate during the fall, reaching a shortage of 35 TWh.
Hydro-Québec was not lucky with the weather in 2023, since it also faced a record demand for electricity, during a severe cold in February.
Listen to the audio (“No issue in supplying our customers”, underlines Hydro-Québec. 9 minutes 55 seconds)
Quebecers will not lack electricity (reserves remain sufficient), but it is revenue intended for the Quebec state that will be lacking.
It's going to be expensive this year, warns a source at Hydro-Québec who is not authorized to speak publicly.
The watchword for 2024 is: export enormously less, to preserve large reservoirs.
A quote from A source at Hydro-Québec
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The power plant The Grande-3 (LG-3) with its tank.
We have restricted electricity sales on external markets in order to manage our resources optimally, confirms Hydro-Québec spokesperson Caroline Des Rosiers.
This is a major concern for the dividend and returns from Hydro-Québec.
A quote from A source at Hydro-Québec
For each terawatt hour that Hydro-Québec does not sell on the markets, $80 million in revenue escapes it, according to the analyst independent in energy regulation Jean-François Blain.
Fortunately we do not yet have to supply the 20 TWh to the State of New York and Massachusetts, adds Mr. Blain, in reference to the export contracts signed for after 2026, because the flexibility would have been less. Two sources at Hydro-Québec describe these contracts as “balloons”.
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Hydro-Québec must pay 75% of its profits for the year in dividends to the government.
According to data provided to Radio-Canada by the Ministry of Finance, government revenues from Hydro-Québec will drop by at least $850 million compared to this which was planned during the presentation of the 2023-2024 budget. But that's not all.
In its report on the financial situation of Quebec for the second quarter (July-September 2023), published on December 15, the Ministry of Finance further reduces its revenue forecasts from state corporations of an additional $370 million. And it’s once again mainly because of Hydro-Québec.
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The ministry writes in the report that the drop in revenues of state corporations between April and September is mainly attributable to the decrease in Hydro-Québec's results, mainly linked to the drop in the value of its exports.
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Hydro-Québec sells electricity on the North American market.
If more than half of the $370 million is attributable to Hydro-Québec, then, we can calculate that in total, at least a billion dollars will be missing this year from the government coffers because of the drop in revenues from this state corporation alone.
And all these sums do not yet include the third quarter of 2023-2024 (October-December), where, again, hydraulic inputs were very low in the north.
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The La Grande-1 (LG-1) power station is located near Chisasibi, in the James Bay region.
A reassessment of the situation is underway, explains the spokesperson for the Quebec Ministry of Finance, Philippe Bérubé. The new forecast of revenues from Hydro-Québec will be made public in the 2024-2025 budget.
Finance Minister Eric Girard warned on Thursday that the state's accounts are doing less well than expected, with an increase in spending and a drop in revenue.
Last year, the state corporation's revenues allowed it to pay a dividend of $3.4 billion to the Quebec government, the highest in its history, which contributes to the socio-economic development of the province.
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Quebec Finance Minister Eric Girard warned on Thursday that the state's accounts are in worse than expected.
For the professor at the University of Montreal and scientific director of the Trottier Energy Institute, Normand Mousseau, the level of reservoirs is less worrying than the level of price increases imposed on customers of x27;Hydro-Québec, this year.
The increase in rates does not compensate for the increase in costs. And, for me, that's a major problem, he said.
If we cannot match revenues with the costs of the system, that means that the government's revenue streams will become increasingly weak. And, the day there are no more [profits], the pressure will be very, very strong for us to privatize Hydro-Québec.
A quote from Normand Mousseau, professor at the #x27;University of Montreal and scientific director of the Trottier Energy Institute.
Regarding the low level of reservoirs, Hydro-Québec anticipates a reverse trend in the future. Climate change could lead to increased water levels in northern Quebec, warns spokesperson Caroline Des Rosiers.
In the long term, forecasts of the state company predicts an increase of 5 to 10% in precipitation in northern Quebec, where the large reservoirs are located.
