Nalcor Energy releases second quarter financial results

August 15th, 2019

Nalcor Energy reported its financial results for the second quarter of 2019.

“Focused on a strong finish, the Muskrat Falls Project team achieved several major milestones in the second quarter of 2019. Making significant progress in the powerhouse, all concrete required for the powerhouse was poured marking the completion of civil work for all four turbine and generator units. We also installed the first turbine followed by the first rotor in Unit 1 of the powerhouse. With project construction 98 per cent complete at the end of June, achievement of first power is anticipated later this year. As the project moves towards power delivery, we continue to look for ways to minimize the impact on electricity rates for our customers.”

Stan Marshall, President and CEO

Second Quarter Financial Highlights

  • Profit for the six months ended June 30, 2019 was $119 million compared to $115 million for the same period in 2018. Key drivers of the increase were a reduction in Hydro Regulated’s energy supply costs primarily due to importing off-island energy to supply Island customers and higher revenues from interim rates. This was partially offset by higher royalties paid to the province by Oil and Gas and a decrease in revenue for Energy Trading as a result of lower volumes of energy available for export and lower export prices.
  • A portion of the increased profit resulting from lower energy supply costs is temporary and anticipated to reverse later in 2019, upon implementation of the final 2017 General Rate Application (GRA) Order.
  • Capital expenditures for the six months ended June 30, 2019, excluding the Maritime Link, were $602 million compared to $694 million for the same period in 2018, a decrease of $92 million. The decrease was a result of lower capital incurred in Muskrat Falls and LCP Transmission and lower capital expenditures in Hydro Regulated due to the timing of capital spend.
  • Total assets for the quarter of $18.9 billion compared to $18.8 billion at December 31, 2018.
  • Debt to capital for the quarter of 63 per cent is comparable to December 31, 2018.

Other Recent Developments

Work has been ongoing this spring and early summer on the installation of major equipment for the turbine and generators. This spring, we installed the first turbine in the powerhouse. This was followed by the installation of the first rotor.

In May, the project achieved another milestone as all of the concrete required for the powerhouse was poured – this was about 170,000 m³ of concrete poured in the powerhouse. All of the civil work is now complete in each of the four units.

Last week, impoundment (raising water levels) of the Muskrat Falls reservoir started. Today water levels in the reservoir are almost 31.5m and based on current monitoring results all structures are behaving as expected, including the North Spur dam.

North Spur stabilization design is the result of more than 50 years of engineering investigations and design work. The design of these works has been based on a large and extensive analysis of data from these investigations. The stabilization work for the North Spur has been peer reviewed and validated by various experts. In addition, experts in the field of sensitive clays were also involved in the research and analysis of the North Spur work. Further, in 2017 a Geotechnical Peer Review Panel concluded that the overall approach, concepts and methods used for checking the stability and integrity of the North Spur follow the current standards and state of the art practice.

Nalcor also continued its work on the important topic of methylmercury supporting and funding science-based research and ongoing monitoring. In July 2019, meetings were held with leaders of the three Indigenous groups in Labrador to discuss methylmercury and wetland capping. Community Agreements were put in place with Innu Nation and NunatuKavut Community Council with Nalcor providing $10 million to each group as they use these funds to support health and social programming in their communities.

On the transmission project, as planned, the Labrador-Island Transmission Link (LIL) was taken offline in May to advance the development and commissioning of the bi-pole software to be available for the delivery of power to the island for the upcoming winter season. This type of work is not uncommon and commissioning and testing of the new transmission assets are continuing. Nalcor is continuing to work with its contractor, GE, to ensure their success in the development and integration of the bi-pole software that is required to safely and reliably operate LIL.

On May 7, Newfoundland and Labrador Hydro (Hydro) received an order from the Board of Commissioners of Public Utilities (Board) in relation to its GRA which was filed in 2017. This represents one of the final steps in the GRA process. Since that time, Hydro carefully reviewed the order and has submitted a final filing to the Board that provides updated information requested as well as proposed electricity rate changes for customers. Over the coming months, the Board will review that filing and make a final decision about electricity rates for 2019. A final decision is expected later this year.

In addition, Hydro’s annual maintenance and capital program began ramping up during the second quarter and will continue into the fall. During this time, work on Hydro’s generation, transmission and distribution assets is carried out to ensure the safe, reliable operation of the province’s electricity system.

Work continues on transitioning a portion of the Oil and Gas business as well as Bull Arm Fabrication to a stand-alone Crown corporation. In Oil and Gas exploration, the Orphan Basin 3D seismic survey has been completed and is providing valuable insights into the 2020 license round. This year’s seismic program includes a 2D survey south of the Carson Basin as well as a 5km x 5km survey in the Laurentian Basin, south of the island of Newfoundland, to understand key source rock risk in advance of the 2022 license round. As well, the first 3D survey offshore Labrador began in July targeting a key part of the Churchill River Delta which will help define the nature and extent of existing structures as well as hydrocarbon indications in the area.

Bull Arm Fabrication signed a short-term agreement with DF Barnes for the warm stacking of the West Aquarius drilling rig in Q4 2018; this agreement concluded the end of July. Future opportunities for the Site continue to be assessed.

A copy of the quarterly report and a recording of the webcast will be available at


Media Contact:

Deanne Fisher

Director, Corporate Affairs and Corporate Planning

t: 709.733.5299 c: 709.697.3418 e: