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HYDRO-QUEBEC: HIGHER FIRST-QUARTER INCOME

 MONTREAL, May 21 /PRNewswire/ -- As forecast, Hydro-Quebec ended the first quarter of 1993 with net income of $520 million. This should enable the utility to achieve its projection for net annual income of $760 million. Compared with the first quarter of 1992, income is up $71 million or 15.8 percent. This substantial increase is due to the suspension since May 1992 of the exceptional measures introduced to offset the low runoff levels of 1991. Since the balance between supply and demand was restored in 1992, no exceptional measures are currently planned for 1993. If the effect of these measures is excluded in the analysis of the financial performance, net income at March 31, 1993 is almost the same as for the corresponding period of 1992, an increase of 1.8 percent.
 Sales On The Rise
 The increased revenue from electricity sales comes mainly from the sale of firm electricity in Quebec. Sales volume in Quebec for the period was 42.0 terawatthours (TWh) or billions of kilowatthours, an increase of 1.0 TWh compared with the same period in 1992. The growth in demand came from the industrial sector, especially the smelting and refining industries, and to a lesser extent from the pulp and paper industry. It should be noted that sales volume in the first quarter of 1992 benefited from the fact that it was a leap year, which had an estimated impact on sales of 0.5 TWh.
 Revenue from sales of firm electricity in Quebec amounted to $2,019 million, an increase of $ 35 million, or 1.8 percent, despite the May 1992 rate increase, which totalled $65 million. The increased demand from the industrial sector did not offset the decline in revenue from other sectors.
 The volume of electricity sales outside Quebec rose by 0.2 TWh, reaching 3.3 TWh at March 31, 1993. Sales on the U.S. market were up by 1.0 TWh, compensating for the drop of 0.8 TWh on the Canadian market. Revenue from all sales outside Quebec amounted to $100 million, an increase of $10 million.
 Expenditure Down Slightly
 Expenditure in the first quarter of 1993 was down by $33 million or 3.3 percent. In contrast to 1992, the results for the first three months of 1993 reflect the absence of exceptional measures designed to offset low runoff. The suspension of these measures as of May 1992 meant avoided costs of over $60 million for the first quarter, compared with the same period in 1992. When this favorable effect is excluded, expenditure actually increased by $29 million or 3.1 percent over 1992. This increase was linked mainly to the impact of commissioning new facilities on the depreciation of fixed assets and, to a lesser extent, the impact of the growth of the debt on capital tax and debt-guarantee fees.
 It should be noted that operating expenses fell by 5.2 percent or $27 million. In addition to the effect of lower oil consumption as a result of the suspension of exceptional measures, this situation is one more indication that rationalization is being successfully carried out throughout the utility. The amounts allocated to current maintenance and such projects and programs as service quality enhancement, the Energy Efficiency project, and training were nonetheless maintained at levels comparable to those in the first quarter of 1992.
 A Substantial Investment Program
 The 1993 investment program amounts to $4,417 million, of which $755 million was already spent at the end of the first quarter, compared with $709 million for the same period in 1992.
 Of this amount, $224 million was devoted to generating facilities in Phase II of the La Grande complex. Construction of the twelfth 735-kV line required an investment of $114 million. The utility also injected $46 million into the various programs to improve service quality and $97 million in the distribution system.
 Financing Program Continues Successfully
 The borrowing program for 1993 amounts to $2,379 million. To this amount are added redemptions prior to maturity planned and carried out during the first quarter for an amount equivalent to $768 million in U.S.-dollar-denominated debt. In addition, if market conditions are favorable in 1993, the utility hopes to renegotiate $875 million.
 In the first quarter, Hydro-Quebec carried out borrowings for a nominal value of $2,789 million, of which $427 million was allocated to renegotiations. During this period, the utility completed three major transactions: two public financings and a public buyback offer, as described below in Highlights.
 Highlights
 The utility floated a new issue for US$1.5 billion on the domestic American market, the largest fixed-rate issue ever made by a foreign issuer. Part of the proceeds of this issue was used for the redemption prior to maturity of US$600 million in bonds, thereby resulting in a reduction in financing costs. In addition, Hydro-Quebec negotiated the reopening of its 1992 global offering in Canadian dollars, issuing a new tranche of $500 million with the same conditions. A second reopening allowed for the sale to a single investor of a tranche of $200 million, bringing the total amount of this issue to $1.9 billion.
 Hydro-Quebec's Development Plan 1993-Proposal was the subject of more than 80 briefs presented to the Parliamentary Commission. The Commission also examined the Performance Commitment 1993-1995, the utility's first three-year performance commitment to its shareholder and customers. And it examined the application for rate increases for 1993 and 1994. The average increase requested for firm electricity rates was 2.3 percent for 1993 and 2.7 percent for 1994. On April 8, the Quebec government authorized a rate increase of 1.5 percent in 1993 and 1.0 percent in 1994, to apply to all customers.
 On January 8, representatives of Hydro-Quebec, Societe d'energie de la Baie James, the Grand Council of the Crees of Quebec and the Cree Nations of Chisasibi and Wemindji signed the La Grande (1992)-Opimiscow Agreement. Under the terms of this agreement, the Cree undertook to discontinue legal proceedings against the various projects related to the La Grande complex, and provision was made for the payment of $50 million to the people affected. The projects represent a $4 billion investment, and the signing of this agreement will allow their construction to be completed.
 Finally, Andre Delisle has been appointed chief financial officer and executive vice president, corporate planning, following the merging of the units responsible for these activities. He replaces Michel Labonte, who has accepted a position with a major Canadian bank. Mr. Delisle had been Hydro-Quebec's vice president, corporate planning since 1988.
 -0- 5/21/93
 /CONTACT: Helen Mayer, media relations of Hydro-Quebec, 514-289-2313/


CO: Hydro-Quebec ST: Quebec IN: UTI SU: ERN

TS -- NY031 -- 1196 05/21/93 12:17 EDT
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Date:May 21, 1993
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