Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you make the most of staying home.
Visit the hub

Hydro still intends to build on its footprint in the United States and Canada, but the change in strategy affects other countries, their cheif executive said.

JACQUES BOISSINOT

Hydro-Québec is pulling back on its hunt for international energy assets and stepping up investments at home as it warns of a big hit to income from the novel coronavirus pandemic.

Under new chief executive Sophie Brochu, Canada’s largest electric utility will suspend a four-year-old effort to purchase assets or stakes in power generation and transmission companies outside Quebec. Hydro still intends to build on its footprint in the United States and Canada, but the change in strategy affects other countries, Ms. Brochu said.

“We’re hitting pause and taking a step back,” Ms. Brochu told reporters Monday after an exchange with the Chamber of Commerce of Metropolitan Montreal. “We’re going to spend the money here instead of investing it in Peru, for example. It’s not only a question of finances. When you go international, you need the people … you need an entire managerial team that will get involved there. Today is not the time for that. We need our people here.”

Story continues below advertisement

Ms. Brochu took over as CEO of Hydro-Québec in early April while much of Quebec’s economy was under a government-mandated shutdown to prevent the spread of COVID-19. The slowdown means major clients such as pulp and paper companies are using less power. That will chop Hydro’s profits by “hundreds of millions of dollars” this year, the CEO said without getting more specific.

“We have no idea at what rhythm the Quebec economy will pick up again,” Ms. Brochu said, adding the utility will have a better idea over the next two months. “The impacts are real. And that’s true for all electric distributors across North America.”

Hydro-Québec had already warned in May that it would be unable to achieve its target net profit of about $2.9-billion this year, in part because of lower demand from clients during a warmer winter.

Between March and June, the forced shutdowns stripped Hydro of some $130-million in revenue from Quebec customers alone, Ms. Brochu said. Lower power exports to the U.S. northeast will compound the problem, she said.

Under previous CEO Eric Martel, Hydro in 2016 revived a strategy to push out internationally in a bid to counter what it predicted would be slowing growth from domestic sales. The company had aimed to generate $100-million in returns from those mergers and acquisitions investments by the end of this year. By 2030, it wanted them to make up one-fifth of annual profit.

Deals did not materialize the way Hydro hoped, however. The utility found itself competing with pension funds and other global investors that were willing to pay much more for energy assets, Ms. Brochu said. Chinese companies, in particular, have emerged as major players with considerable financial means, according to Yvan Cliche, a former Hydro executive who is now a policy fellow at the University of Montreal.

In the end, Hydro struck only one major M&A-type investment agreement under Mr. Martel’s tenure. That was a $661-million private placement in Longueuil, Que.-based Innergex Renewable Energy Inc., announced in February of this year. Hydro also committed another $500-million to co-investment projects with Innergex.

Story continues below advertisement

The coronavirus crisis has only increased the urgency of putting the utility’s money to work in Quebec now, Ms. Brochu said. She said the utility will accelerate its previously-planned capital investments – including modernizing its Outardes-2 and Manic-3 hydroelectric power facilities and building new charging stations to meet the increasing popularity of electric cars.

Last week, the Crown corporation announced it would expand the subsidies available to Quebec businesses wanting to improve their energy efficiency with projects such as upgrades of heating and lighting systems. Ms. Brochu called it a “no-regret move" that would benefit the economy. The utility has also suspended administration charges for unpaid bills during the pandemic and vowed it will not interrupt power to homes and businesses for non-payment.

Executives with the power producer signalled in May that its international expansion was on ice. “I don’t see how Hydro-Québec could take $5-billion now and invest it in Chile because we have an investment opportunity there. Instead, the $5-billion will be invested here to support the Quebec economy,” chief financial officer Jean-Hugues Lafleur said at the time.

Hydro reported net income of $1.53-billion for its first quarter ended March 31, a 14-per-cent decline from the same period last year. Revenue fell 6 per cent to $4.37-billion.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies