Hydro-Québec reservoirs still low: towards another billion-dollar hole?

While in 2023, the low level of Hydro-Québec’s reservoirs cost the public treasury $1.3 billion, new data for the current year show that the situation is almost identical this year.

Radio-Canada compared the levels of 3 of the state corporation’s largest reservoirs, which has 28 in total.

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Last year, the water deficit caused the disappearance of approximately 35 terawatt hours (TWh) of hydroelectric production capacity, the equivalent of all the electricity exported in 2022, or 20% of all the electricity consumed by Quebecers. in one year.

Hydro-Québec refuses to comment on the dividend that will be paid in 2024, but recognizes that its energy stocks are similar to those of last year.

A context of low hydraulicity requires dynamic management of energy stocks and this can lead to a reduction in electricity sales planned on short-term markets outside Quebecmentions in writing a spokesperson for the state-owned company, Lynn St-Laurent.

By publishing its financial results for the first half of 2024 last August, Hydro-Québec recognized that it had to sell less electricity on external markets than during the same period in 2023. Despite falling sales, the The net profit objective for the current year, between $2.2 and $2.7 billion, remains the same, indicates Hydro-Québec.

The state company adds that the low level of reservoirs has no impact on the security of energy supply in Quebec.

In the opinion of energy specialist Pierre-Olivier Pineau, current levels do indeed portend another reduced dividend for the year 2024.

When Hydro-Québec receives less water, it can export less. When it exports less, it makes less money and makes fewer profits.

Mr. Pineau recalls that the marked drop in Hydro-Québec’s dividend last year was directly linked to the state-owned company’s ability to export electricity.

We had record years [d’exportation] with more than 30 TWh during the years 2015 until 2021 and 2022. But in 2023, we export much less, so that has an automatic impact on Hydro-Québec’s revenues and its profithe adds.

The Ministry of Finance cautious

In the budget tabled last March, the Ministry of Finance already forecast that revenues from Hydro-Québec in 2024-2025, at $2.045 billion, would be barely higher than the previous year.

After recording a historic deficit of $11 billion last spring, is the CAQ government afraid of having to deprive itself of significant revenue again this year? The office of Minister of Finance Eric Girard preferred not to comment on the data obtained by Radio-Canada, contenting itself with referring to forecasts for the last fiscal year.

After two consecutive years of drought, the government is, however, forecasting better weather conditions and rising incomes from 2025-2026. Quebec expects to receive a dividend from Hydro-Québec of nearly $2.7 billion.

Another summer of drought

A compilation of precipitation falling in Nord-du-Québec and the Côte-Nord since the start of 2024 confirms another year well below expected normals.

According to data provided by Environment Canada, the North Shore has received, depending on the sector, 10 to 40% less precipitation than normal since the start of the year.

For the months of June, July and August, the region where the Manic-5 reservoir is located received only 100 to 300 mm of rain, or 55% less than expected.

The picture is not much better in Nord-du-Québec, where the reservoirs of the La Grande complex are located. The area should have received between 10 and 25% more precipitation since the start of 2024.

The drought was particularly difficult there this summer when only 100 to 300 mm of rain fell, a difference varying between 40 and 70% below normal.

Even if the situation is far from ideal, Pierre-Olivier Pineau nevertheless wants to put the current low level of the reservoirs into perspective. If there is an impact on Hydro-Québec’s short-term revenues, the phenomenon is not new, since periods of significant drought also affected the reservoirs in the 1980s and 1990s, without having any repercussions for Quebec customers.

The professor, however, warns: these years of drought will eventually have consequences if they add up too often.

We cannot afford to have six summers in a row with very low water levels. It could happen, and despite the reservations of Hydro-Québec, which does multi-year planning, […] If there is too little water for years in a row, it will be a problem.

Pierre-Olivier Pineau also specifies that Hydro-Québec can obtain electricity from its Ontario neighbor in the event of increased demand in times of drought.

If climate change risks creating more variations in precipitation, the forecasts on which Hydro-Québec is based suggest that the northern regions of the province, where the reservoirs are located, should receive more water in the long term.