That is an excellent question. You are absolutely right; in 2014, our exports generated $800M in net revenue.
Let us remind you that Hydro-Québec has four divisions. Among them are Hydro-Québec Distribution, which provides Quebecers with a reliable supply of electricity, and Hydro-Québec Production, which generates electricity. This electricity is then sold to Hydro-Québec Distribution, so it can supply Québec markets, and exported to neighboring markets. There is no connection between the company’s annual net revenue and the rate application filed with the Régie de l’énergie, and each division serves a different market.
Hydro-Québec Distribution’s activities cater to Québec customers and are regulated by the Régie de l’énergie. Every year, Hydro-Québec Distribution files a rate adjustment application with the Régie de l’énergie. The requested adjustments are based on the amounts we need to spend in order to be able to offer electricity services to all of our Québec customers in in the upcoming year, and on the amounts we expect to receive when our customers pay their electricity bills. As you can see below, the rates set for our residential customers are the lowest in North America.
Hydro-Québec Production’s activities, including exports, are not regulated by the Régie de l’énergie. In order to access the neighboring markets, we must first obtain permits from the regulating bodies for the North American market (NERC and FERC).
In 2014, net electricity exports accounted for 12.7% of the company’s sales, but 24.1% of its net income. It should be noted that 75% Hydro-Québec’s of profits are returned to the Québec government in the form of a dividend, which is used to help support public expenses.