Newfoundland and Labrador Hydro (Hydro) released its financial results for the second quarter of 2024 today.

Key highlights

• Hydro’s profit for the second quarter (April-June 2024) was $95 million, a decrease of $78 million compared to the same period in 2023.
• The key drivers of the decrease for the quarter relates to:
  • Payment of $90 million to pay down a portion the Supply Cost Variance Deferral Account (SCVDA) as per rate mitigation. This is equal to one-third of the year-end 2023 balance ($271 million) in the account. The SCVDA records the balance of payments related to Muskrat Falls’ costs which would have otherwise been collected from customers. Per the Rate Mitigation Plan announced by the Province in May, the ending 2023 SCVDA balance is to be settled through Hydro’s internal sources of funding from 2024-2026.
  • Lower volume of oil sales.
  • Losses related to damage of Lower Churchill Project (LCP) assets in the Goose Bay warehouse fire. Insurance proceeds related to the fire will be recorded when received.
  • These decreases are partially offset by increased energy sales as a result of a short-term energy sales agreement.
• On a year-to-date basis from January to June 2024, Hydro’s profit was $389 million, an increase of $57 million compared to the same period in 2023.
• The key drivers of the increase relate to:
  • The net impacts of commissioning of the LCP assets in Q2 2023 and increased energy sales as a result of a short-term energy sales agreement.
  • The increases are partially offset by the payment of $90 million towards the SCVDA and a lower volume of oil sales.
• With commissioning of the LCP assets, additional revenue was realized by the LCP portion of the business due to the sale of power to Hydro’s regulated utility portion of the business as per the Project’s original power purchase agreement. Hydro’s regulated utility in turn recorded these costs in the SCVDA for future recovery, resulting in no impact to Hydro’s regulated utility net income. The additional revenues had an impact on Hydro’s overall consolidated net income.
• In June 2024, consolidated internal funds were utilized to settle $90 million of regulated costs to Hydro’s regulated utility segment in accordance with the rate mitigation plan. This reduced consolidated net income by $90 million and reduced the balance in the SCVDA. In summary, internally generated funds were utilized for rate mitigation efforts towards Hydro’s regulated utility in order to settle $90 million owing in the deferral account.

Links:

The Quarterly Financial Report can be found here: https://nlhydro.com/2024-second-quarter-financial-results/

Media Contact:

Jill Pitcher
Team Lead, Public Affairs
c. 709-689-9938 e. nlhydromedia@nlh.nl.ca