St. John’s, NL – Today, Newfoundland and Labrador Hydro (Hydro) released its Financial Statements and financial results for the third quarter of 2022.

Hydro’s profit for the third quarter was $180 million, an increase of $147 million compared to the same period in 2021. For the nine-months ending September 30th, 2022, Hydro’s profit was $543 million, an increase of $506 million over the same period last year. The profit is predominantly non-cash. Hydro’s cash for the first nine months of 2022 increased by $78 million. The non-cash transactions affecting Hydro’s bottom line are:

• Bringing Muskrat Falls assets online: This primarily relates to a deferral of costs in Regulated Hydro. As per the Power Purchase Agreement (PPA), Muskrat Falls costs are charged to Regulated Hydro; however, Hydro has not yet begun recovering these costs from customers. Regulated Hydro has placed these costs in ”deferral accounts”, as per approval of the Board of Commissioners of Public Utilities for future recovery in advance of Rate Mitigation implementation. The deferral of costs for the nine months ended September 30, 2022 was approximately $290 million and does not result in additional cash for the company.
• Reversal of a write-down of oil and gas assets: In 2020, due to the falling oil prices, the value of the oil and gas assets was deemed to be lower than the value stated on the company’s balance sheet. As a result, the assets were written down or impaired. In the second quarter of 2022, due to the rebound of oil and gas prices, $118 million of the write-down was reversed, and the oil and gas assets increased in value. Impairment and reversals of impairments as a result of volatility in global oil prices are not uncommon in the oil and gas industry. Although they do not directly impact cash flow, impairments and reversals can lead to large fluctuations in profit or loss between financial reporting periods.
• Hibernia Southern Extension (HSE) Redetermination: This item relates to a transaction which occurred in the first quarter of 2021 and had a significant negative impact on financial results last year. Therefore, the financial results for the nine-months ending September 30th, 2022 are compared to a year in which a non-routine transaction took place. The financial results for 2021 were unusually lower due to the Redetermination. The non-cash impact is approximately $100 million.

Oil and electricity export prices continue to be higher than the prior year as are electricity export volumes, contributing a total of approximately $117 million to year-to-date earnings. Cash generated through Hydro’s operations this quarter will be used to service debt until Labrador-Island Link is commissioned, and to fund its operations.

Hydro’s efforts to find efficiencies and cut costs continue. Through a combination of reducing executive and full-time positions, eliminating redundancies, and implementing other cost cutting measures, Hydro has reduced its operating costs by approximately $19 million.

Quote:
“Our organization is going through a significant amount of change and continuing to evolve. Our financial reporting is complex and a direct result of the ongoing changes. We are pleased to see positive results in in our net income.”– Lisa Hutchens, VP, Chief Financial Officer.

Links:
The Quarterly Financial Report can be found here: https://nlhydro.com/about-hydro/publications/

Media Contact:
Deanne Fisher
Director, Public Affairs & Customer Service
t: 709.733.5299 c: 709.697.3418 e: deannefisher@nlh.nl.ca