Gaz Métro reports 2007 Q3 results



    
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    HIGHLIGHTS:

    - Partners' income up $1.2 million over same period last year
    - Favourable impact on results from acquisition of Green Mountain Power
      Corporation
    - Quebec Distribution submits 2008 rate application to Régie de l'énergie
    - Rabaska gets green light from Bureau des audiences publiques sur
      l'environnement
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    MONTREAL, Aug. 8 /CNW Telbec/ - Gaz Métro Limited Partnership
(TSX: GZM.UN, "Gaz Métro") reports Partners' income of $177.2 million, or
$1.47 per unit, for the first nine months of the 2007 fiscal year, compared to
$173.5 million, or $1.48 per unit, at the same date last year. For the third
quarter of the current fiscal year, Partners' income is $1.1 million, or
$0.01 per unit, compared to a loss of $0.1 million for the same period the
previous year.

    Consolidated Results

    Income for the third quarter is up due to a number of factors, including
the inclusion of Green Mountain Power Corporation's (GMP) net income since
April 12, 2007 and lower expenses in respect of the Rabaska liquefied natural
gas (LNG) terminal project. These factors, coupled with certain non-recurring
revenues in subsidiaries in the Energy Services and Other Sector, are the
reasons for the 2.1% increase in income for the first nine months of the 2007
fiscal year compared to 2006.
    "The third quarter was an important one for Gaz Métro, which acquired
Green Mountain Power Corporation. Completed on April 12, this acquisition of
the second largest electricity distributor in Vermont is perfectly in line
with the targeted prudent diversification strategy of our energy activities",
stated Sophie Brochu, President and Chief Executive Officer.
    "In Quebec, the efforts we put into regulatory matters also produced
results during the quarter. The Régie de l'énergie's approval of the proposed
changes to the performance incentive mechanism brings the regulatory framework
more in line with the Partnership's market reality. Furthermore, in connection
with the 2008 rate application submitted to the Régie, we proposed changes to
the present formula for determining the rate of return allowed on Partners'
deemed common equity. Those changes reflect more realistically Gaz Métro's
business risk and the market's expectations", said Sophie Brochu.
    "Lastly, the Rabaska LNG terminal project reached another major milestone
with the publication, just after the end of the quarter, of a favourable joint
report by the Bureau des audiences publiques sur l'environnement and the
Environmental Studies Association of Canada", added Sophie Brochu.
    Consolidated revenues for the third quarter of the 2007 fiscal year are
$388.7 million, which is $65.6 million, or 20.3%, higher than the same period
last year. The main reason for this is the consolidation of GMP's sales since
April 12, 2007. For the first nine months, consolidated revenues are down
$113.5 million, or 6.4%, to $1,653.9 million. The main reason for this is a
24% decrease in the average selling price of natural gas during the period,
offset in part by the consolidation of GMP's sales.
    The increase in revenues from the distribution activity in Quebec,
coupled with the impact of the consolidation of GMP, increased gross margin by
$12.9 million, or 11.8%, to $121.9 million during the third quarter of the
2007 fiscal year compared to the same period in 2006. After nine months, gross
margin of $524.4 million is $25.6 million, or 5.1%, higher than the
corresponding period last year.
    Cash flows related to operating activities, before change in non-cash
working capital items, are $45.1 million for the third quarter, an increase of
$12.8 million over the same period last year. They are $337.3 million for the
first nine months of the 2007 fiscal year, an increase of $39.2 million. This
can be explained by temperatures that were colder than the first nine months
of the previous year, resulting in greater average energy consumption, and the
increase in the distributions received from Portland Natural Gas Transmission
System (PNGTS).

    Income Distribution

    Gaz Métro inc., in its capacity as General Partner of the Partnership,
declared today a distribution of $0.31 per unit, payable October 1, 2007 to
Partners of record at the close of business on September 15, 2007.

    Energy Distribution Sector

    Following the acquisition of GMP, the Energy Distribution Sector,
formerly the "Natural Gas Distribution Sector", is now broader, and includes
all Gaz Métro's energy distribution activities.
    The Partners' loss from the Energy Distribution Sector was $2.7 million
in the third quarter, down $0.3 million, or 9.3% from the third quarter of the
2006 fiscal year. After nine months, Partners' income is $157.8 million, an
increase of $1.2 million, or 0.8%, which is attributable to the increase in
income from the distribution of natural gas and the consolidation of GMP's
results since April 12, partially offset by additional interest expense for
financing GMP's activity.
    Normalized deliveries (based on temperatures, in Quebec) during the third
quarter of the 2007 fiscal year total 1,265 million cubic metres, which is
9.1% higher than the 1,160 million cubic metres in 2006. For the first nine
months of the 2007 fiscal year, normalized volumes of 5,336 million cubic
metres are 13.8% higher than last year. This can be largely explained by the
start-up of the Bécancour cogeneration plant and increased consumption in the
metallurgy sector.
    On May 15, in connection with its rate application for the 2008 fiscal
year with the Régie de l'énergie, Gaz Métro proposed changes to the present
formula for determining the rate of return allowed on deemed Partners' common
equity. The Régie's hearings on this matter should start towards the end of
August, with a final decision expected in September 2007.

    Transportation Sector

    Income from the Transportation Sector is up $0.1 million in the third
quarter to $2.5 million. For the first nine months of the fiscal year, income
is $11.2 million, which is $3.5 million lower than last year. The cumulative
decrease is due, among other things, to lower PNGTS earnings following the
loss of two large customers that ceased to contribute to its results, the
reduction in the rate of return allowed on Trans Québec & Maritimes Pipeline's
equity, as well as higher financial expenses related to this Sector.

    Storage Sector

    Partners' income from the Storage Sector is $0.3 million in the third
quarter, which is $0.8 million lower than the third quarter the previous year.
For the first nine months of the 2007 fiscal year, Partners' income of     
$2.2 million is down $1.3 million. The main reasons for this are non-recurring
revenue in the first quarter of 2006, a reduction in the rate for the
Pointe-du-Lac storage site following a decision by the Régie de l'énergie on
June 6, and an increase in financial expenses allocated to the Sector.

    Energy Services and Other Activities Sector

    Income from the Sector is $0.4 million in the third quarter compared to
$1.0 million for the same period last year. For the first nine months of the
2007 fiscal year, income is $5.6 million, compared to $3.5 million during the
corresponding period in the 2006 fiscal year. The main reason for the decrease
in the third quarter is the fact that during that period in 2006 HydroSolution
had non-recurring gains from financial instruments. The reasons for the
increase after nine months are the partial recognition of the deferred gain on
the sale in 2006 of a portion of the units of Climatisation et Chauffage
Urbains de Montréal, and the recording of a non-recurring tax benefit in MTO
Telecom Inc.

    Business Development

    On July 5, the review committee formed by the Bureau d'audiences
publiques sur l'environnement and the Environmental Studies Association of
Canada made public a favourable report on the installation of the Rabaska LNG
terminal and the related infrastructures. The next step is to get the Quebec
government's approval. There were no expenditures on the project affecting the
results during the quarter, which reduced development and other expenditures
by $2.2 million and $5.1 million in 2007, compared to the quarter and the nine
months ended June 30, 2006 respectively.

    Legislative Changes

    On June 22, 2007, the House of Commons adopted Bill C-52 implementing the
amendments to the Income Tax Act proposed in the Minister of Finance's Tax
Fairness Plan tabled on October 31, 2006 and concerning income trusts and
limited partnerships (flow-through entities). As a result of these amendments,
effective October 1, 2010, income tax (presently paid by each Partner) will be
paid at the level of Gaz Métro at the corporate tax rate and after-tax
distributions will be considered as dividends for income tax purposes.
    In its present form, this change to the tax rules would reduce income
that can be distributed because it would be after tax. The impact on the
Partners would depend on their individual tax status. Gaz Métro is analyzing
the various alternatives available to it.

    Conference Call

    The Partnership will hold a telephone conference with financial analysts
to discuss its results for the third quarter of the 2007 fiscal year on
Wednesday, August 8, 2007 at 4:00 p.m. (Eastern time). Interested parties are
invited to listen in. Sophie Brochu, President and Chief Executive Officer,
and Pierre Despars, Executive Vice President and Chief Financial Officer, will
be the main speakers.
    The conference can be accessed live by dialling 1-800-732-6179 or
416-644-3414. It will also be webcast on Gaz Métro's website
(www.gazmetro.com/investors) in the "Webcasts" section.
    Rebroadcasts can be accessed for 30 days by telephone at 1-877-289-8525
or 416-640-1917 (access code 21240457#), and for 90 days on Gaz Métro's
website.

    Gaz Métro Overview

    With more than $3.1 billion of assets and more than 1,500 employees in
Quebec, Gaz Métro is a leading Quebec energy company and one of Canada's
largest natural gas distributors. Gaz Métro serves about 167,000 customers in
Quebec through an underground pipeline network of almost 10,000 km.
    Through its wholly-owned subsidiary, NNEEC, Gaz Métro has been active in
New England's energy industry since 1986 and has nearly 300 employees there.
NNEEC includes Vermont Gas Systems, the sole gas distributor in Vermont, and
Green Mountain Power Corporation, the second largest electricity distributor
in that State.
    Through investments in wholly-owned subsidiaries or in partnerships with
other investors, Gaz Métro is active in natural gas transportation and storage
as well as energy services and water and waste water systems and fibre optic
networks. Gaz Métro also participates in various development projects in the
energy sector.

    
    Highlights

                                  Three months ended       Nine months ended
                                             June 30                 June 30

    (in millions of $, except       2007        2006        2007        2006
     for per unit data in $)  (unaudited) (unaudited) (unaudited) (unaudited)
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    CONSOLIDATED INCOME AND
     CASH FLOWS

    Revenues                       388.7       323.1     1,653.9     1,767.3
    Gross margin                   122.0       109.1       524.4       498.8
    Partners' income (loss)          1.1        (0.1)      177.2       173.5
    Cash flows related to
     operating activities
     (before working capital)       45.1        32.3       337.3       298.1
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    Per unit data

    Partners' income                0.01        0.00        1.47        1.48
    Distributions paid to
     Partners of record on
     September 15, December 15
     and March 15                   0.31        0.34        0.93        1.02
    Weighted average number
     of units outstanding
     (in millions)                 120.4       117.5       120.4       117.5
    Market prices
      High                         17.58       20.53       18.50       22.50
      Low                          16.50       15.79       15.30       15.79
      Close                                                16.86       16.20
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                                                            June   September
                                                              30,         30,
                                                            2007        2006
                                                      (unaudited)   (audited)
    CONSOLIDATED BALANCE SHEETS

    Total assets                                         3,115.1     2,783.2
    Total debt                                           1,623.0     1,433.0
    Partners' equity                                     1,027.8       924.6
    Partners' equity per unit                               8.53        7.87
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    Gaz Métro's third quarter consolidated financial report can be accessed
in the Investors Section of the Partnership's website at:
www.gazmetro.com/investors and will also be available shortly on Sedar's
website www.sedar.com exploited by the Canadian Securities Administrators.




For further information:

For further information: Investors and Analysts: Caroline Warren,
Investor Relations, (514) 598-3324; Media: Frédéric Krikorian, Public and
Governmental Affairs, (514) 598-3656


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