Friday, August 24, 2012

OPG 2nd Quarter Results indicate the Impact of declining HOEP on public hydro

OPG's results are as expected given the state of the markets in the 2nd quarter (OPG's profitability being heavily influenced by the performance of it's many billions in the nuclear decommissioning/waste funds), and the continued hits on the non-regulated hydro segment due to the depressed Hourly Ontario Energy Price.
I will soon be posting an article on my original content blog connecting the current government's enormous subsidies of natural gas-fired generation plants to the declining revenues from the public generator's unregulated hydro business.
The results display a quarterly loss of $9 million in the Unregulated hydro business, on prices of 2 cents/kWh

Ontario Power Generation Reports 2012 second quarter Financial Results (.pdf) 
[Toronto]: Ontario Power Generation Inc. (“OPG” or the “Company”) today reported its financial and operating results for the three and six months ended June 30, 2012. Net income for the second quarter of 2012 was $43 million compared to $109 million for the same period in 2011. Net income for the six months ended June 30, 2012 was $197 million compared to $262 million for the same period in 2011.
OPG’s net income in the second quarter of 2012 decreased by $66 million compared to the second quarter of 2011. The decrease was primarily due to lower earnings from the Nuclear Fixed Assets Removal and Nuclear Waste Management Funds (“Nuclear Funds”) and lower electricity spot market prices that significantly affected revenues from OPG’s unregulated hydroelectric stations.
 Read OPG's 2012 Q2 Financial Results (.pdf) 

 I previously prepared a graphic based on my estimates of OPG's Q2 results for each power segment, and have updated the figures (OPG changed it's accounting methodology so there is some movement in 2011 figures now being reported, but the changes should be minimal).

The steep decline in unregulated hydro pricing is represented by the appropriately red line.

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