The change is being attributed to more oil production, favourable decisions for Hydro at the Public Utilities Board and a one-time payment from business at the Bull Arm Fabrication Site.
According to the financial report released Monday, the six-month, year-to-date profits have jumped $98 million compared to the same period last year, reaching $135 million.
In a conference call and webcast to discuss the quarterly results, CEO and president Stan Marshall was quick to dismiss any notion of Nalcor directly using profits to knock down the cost of power for consumers.
“The money that goes to Nalcor from the province is borrowed and so we have to give return to the province for them to pay their debt,” Marshall explained. “Ultimately, at the end of the day how much is paid for Muskrat Falls through rates and how much through taxes is a public policy decision.”
Derrick Sturge, Nalcor’s vice-president of finance and CFO highlighted the move by subsidiary Newfoundland and Labrador Hydro from a loss of $5 million in the first six months last year to a profit of $40 million this year.
Another contributor is the close out of the ExxonMobil lease at Bull Arm, resulting in a one-time payment of approximately $26 million.
As for new site tenants, Marshall says Nalcor is currently assessing some expressions of interest, but nothing of significant nature.
“The expressions we got relate to using parts of the facility for some kind of offshore services, but nothing big,” he suggested.
Overall funds from operations and earnings before interest, taxes, depreciation, depletion, amortization and accretion (EBITDA) both increased $79 million over the same period last year, which Sturge says is due largely to the same factors that drove profits.
“We had good performance in the quarter and from our perspective, good performance means stronger cash flow, which means less reliance on equity and other sources of financing,” he said.
Capital spending is up. Not including the Maritime link, capital spending climbed $166 million to $1.343 billion.
In terms of total assets, Nalcor has seen an increase of $3.5 since billion since the end of 2016 to reach $17.6 billion as of the end of June.
Tower collapse report on the way
Meanwhile, work on the transmission towers connecting Bay D’Espoir to the Avalon Peninsula, save for some tower assembly and foundation work, has yet to resume since two workers were killed in mid-June when a tower near Come By Chance collapsed.
“We're waiting for clearance from occupational (health and) safety, which we expect to get sometime this month to resume the work of actually erecting towers and stringing the lines,” says Marshall, adding that Nalcor has no indication that the tragedy was caused by tower design.
As for the Muskrat Falls project, the transmission lines between Churchill Falls and Muskrat Falls were 96 per cent complete at the end of June, and the Labrador-Island link was 84 per cent complete.
The project overall has reached 78 per cent complete.
Marshall says there have no cost overruns on the project since his most recent update, pegging the project at $12.7 billion.