Hydro's earnings surge by $291 million for year

Gerry Bellett, Vancouver Sun, 30 Jun 2005
Brian Lewis, The Province, 30 Jun 2005

Gerry Bellett
Vancouver Sun
30-Jun-2005

Despite low water levels in the Pacific Northwest in the past year and higher energy costs, BC Hydro announced a net income of $402 million for the fiscal year 2005, an increase of $291 million over fiscal 2004, according to Hydro's annual report released Wednesday.

While the consolidated net income of $402 million for the fiscal year ending March 31, 2005 was lower than the company's 2004 service plan forecast, the dividend paid back to the province was $339 million compared with $73 million last year.

Net income in 2004 was $111 million.

Alister Cowan, BC Hydro chief financial officer, described 2005 as a successful year "even with the challenges such as higher energy costs."

"This will allow us to return an increased dividend to the provincial government, which can then be used to help fund key provincial priorities such as health care and education," said Cowan in a statement.

The report said Hydro's energy costs for the year were $1.959 billion -- an increase of $379 million over the previous year. Much of the increased costs resulted from higher electricity imports, which for fiscal 2005 were 6,896 GWH compared with 5,349 GWH the year before.

The increase in electricity imports reflects the fact that "we were coming off a low-water year as well as ongoing operating decisions to import electricity when it is cheaper than running more expensive resources like Burrard Thermal," said Cowan.

He said Hydro's long-term goal was energy self-sufficiency.

Trade revenues and sales volumes were both up compared with the year before.

Trade revenues were set at $1.021 billion compared with $871 million in fiscal 2004, with some of the increase being the result of a three per-cent increase in average sales prices, which rose to $63 per MWh from $61 per MWh in 2004.

Sales volumes also rose to 29,706 GWh from 28,373 GWh the previous year, an increase of five per cent.

Hydro said it maintained its strong commitment to the environment and social responsibility during the past fiscal year and has announced that one of its long-term goals is a policy of "no net incremental environmental impact" plus a reduction in electricity consumption through such means as the Power Smart program.

"We exceeded our overall Power Smart energy conservation target again this year, achieving savings of 1.355 gigawatt-hours of electricity or enough to meet the needs of over 130,000 homes," said Cowan.

He said Hydro did even better in the area of clean electricity, with "about 61 per cent of our incremental load acquired this year from B.C. Clean sources."

BC Hydro president and CEO Larry Bell said among the key accomplishments of the last year was the completion of "our first revenue requirements process in over 10 years before the B.C. Utilities Commission."

"The result -- a 4.85 per-cent rate increase -- provided the funds necessary to continue operating our business in the most efficient way for our customers while still keeping their electricity rates among the lowest in North America," said Bell.

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Brian Lewis
The Province
30-Jun-2005

The provincial government's record $2.6-billion surplus for the recently completed fiscal year, which was disclosed in yesterday's audited financial statements, was given a significant boost by B.C. Hydro ratepayers.

In releasing its fiscal 2005 financial statements, Hydro said a stronger earnings year allowed it to pay $339 million into Victoria's coffers under the utility's obligation to pay the province a special dividend each year.

That figure compares with a $73-million dividend payment in the previous year.

The $339-million payment was in addition to a consolidated net income of $402 million that Hydro generated during the year ending March 31, 2005. While that figure was below earlier Hydro forecasts, it represented an increase of $291 million over 2004 earnings. Included in the earnings was a one-time payment of $137 million from Alcan Inc. as a result of an arbitration award under a power purchase and sales agreement.

Hydro's bottom line was also affected by higher energy costs of $379 million and a significant part of those extra costs was due to increased electricity imports to meet domestic demand.

"Through our long-term goal of energy self-sufficiency, B.C. Hydro will be working to de-crease this reliance on imports and the costs that it brings," said Alister Cowan, Hydro's chief financial officer.

Export revenues rose to $1.02 billion from $871 million last year.

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