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The Management Discussion and Analysis reports on British Columbia Hydro and Power Authority’s (the Company) consolidated results and financial position for the year ended March 31, 2009 (fiscal 2009). This discussion should be read in conjunction with the audited consolidated financial statements and related notes of the Company for the years ended March 31, 2009 and 2008. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are expressed in Canadian dollars. This report contains forward–looking statements, including statements regarding the business and anticipated financial performance of BC Hydro. These statements are subject to a number of risks and uncertainties that may cause actual results to differ from those contemplated in the forward–looking statements. BC Hydro’s results for fiscal 2009 benefited from increased income from energy trading activities, but were adversely impacted by lower domestic revenues, higher energy costs, higher amortization expense and higher finance charges compared to the prior year. Certain differences between planned and actual amounts are transferred to regulatory accounts for inclusion in future rates. Highlights- Net income for the year ended March 31, 2009, was $366 million compared to $369 million in the prior year. This resulted in a return on equity, based on equity as defined for regulatory purposes, of 11.75 per cent compared with 11.33 per cent for fiscal 2008.
- On March 13, 2009, the British Columbia Utilities Commission (BCUC) issued a final decision with respect to BC Hydro’s F2009/2010 Revenue Requirements Application (RRA). The BCUC approved a rate increase for fiscal 2009 of 2.34 per cent and a 0.5 per cent rate rider for the purpose of recovering a portion of the current balances in the deferral accounts. Both are effective April 1, 2008. The BCUC also directed that the difference between the interim rate and the final rate be refunded to customers.
- Hydro generation levels for the year ended March 31, 2009 were 14 per cent lower than in the prior year as a result of lower than average system inflows into system reservoirs compared with higher than average inflows in the prior year. To continue to meet domestic load requirements, BC Hydro was required to purchase more energy from the market which is more expensive than energy generated from its system, increasing the overall cost of energy. This was partially offset by reduced load as a result of lower sales to large industrial customers primarily as a result of closures of pulp and paper mills due to weakness in the forestry sector.
- Property, plant and equipment expenditures of $1,400 million are 30 per cent higher than the prior year ($1,076 million) primarily due to the Vancouver Island Transmission Reinforcement project, Revelstoke Unit 5 installation and system improvements to the distribution network. This is a positive result given BC Hydro’s significant capital expenditure requirements over the next several years in order to be able to continue to meet load growth requirements and maintain its aging infrastructure.
Financial Results documents
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