Gaz Métro reports second quarter results for 2009 fiscal year

    Diversity of operations supports solid financial performance

    MONTREAL, May 8 /CNW Telbec/ - Gaz Métro Limited Partnership (TSX:
GZM.UN, Gaz Métro) ends the first six months of its 2009 fiscal year with
adjusted net income of $190.8 million, or $1.58 per unit, which is $2.8
million, or $0.02 per unit, higher than the same period for the previous year.
For the second quarter of the 2009 fiscal year, Gaz Métro reports adjusted net
income of $119.6 million, or $0.99 per unit, which is down slightly by $1.0
million, or $0.01 per unit, from the adjusted net income for the second
quarter of the previous fiscal year(1).
    Results were positively impacted by the National Energy Board's (NEB)
favourable decision on Trans Québec & Maritimes Pipeline Inc.'s (TQM) rate
application, the contribution of the Vermont energy distribution activity and
the improved profitability of the Energy Services segment.
    "The most notable event in this second quarter was the NEB's favourable
decision on March 19 on TQM's request for a new methodology for determining
its return on capital and its transportation rates. This decision, which
covers TQM's 2007 and 2008 fiscal years and for which the favourable
retroactive impact totalling $6.7 million has been included in Gaz Métro's
results, represents significant progress in Canadian regulatory thinking and
re-establishes the criteria of a fair and reasonable rate of return for the
energy infrastructure industry", said Sophie Brochu, President and Chief
Executive Officer.
    "Even though the present recession had an impact on energy deliveries
during the first six months of the current fiscal year, Gaz Métro's financial
performance was nevertheless solid, which highlights the benefits associated
with the operational and geographic diversity of our activities", added Sophie

    Segmented Analysis

    Net income from the Vermont energy distribution activity was up $3.0
million in the second quarter and $4.8 million for the first six months(2)
because of the strengthening of the U.S. dollar in relation to the Canadian
dollar and the higher natural gas deliveries as a result of relatively colder
temperatures than during the same periods the previous year.
    This favourable contribution by the Vermont operations is offset by
reductions of $6.5 million in the second quarter and $4.5 million in the first
six months in the net income from the natural gas distribution activities in
Quebec (Gaz Métro-QDA). Higher revenues as a result of the rate increases in
various markets, which were completely offset by the decrease in normalized
deliveries, were therefore unable to cover the increase in operating,
maintenance and amortization expenses. The 9.0% decrease in Gaz Métro-QDA's
volumes in the second quarter of the present fiscal year is due to the impact
of the economic situation, customers' energy conservation initiatives, which
Gaz Métro fosters, lighter consumption in the metallurgy and refining sectors
as well as lower short-term interruptible service sales.
    As a result, net income from the Energy Distribution segment, which
includes Gaz Métro-QDA and the natural gas (Vermont Gas Systems, Inc. - VGS)
and electricity (Green Mountain Power Corporation - GMP) distribution
activities in Vermont, was $104.3 million for the second quarter of the 2009
fiscal year, $3.5 million lower than the second quarter of the 2008 fiscal
year, and $171.1 million for the first six months of the current fiscal year,
$0.3 million higher than the first six months of the previous fiscal year.
    In the Transportation of natural gas segment, Gaz Métro's net income was
up $2.0 million for the second quarter and $0.9 million for the first six
months of the present fiscal year on account of the recognition, in the second
quarter, of the favourable retroactive impact of a $6.7 million rate
adjustment the NEB allowed TQM on March 19 for its 2007 and 2008 fiscal years.
In the second quarter of the 2008 fiscal year, Gaz Métro had recorded a
non-recurring $5.3 million gain realized by Portland Natural Gas Transmission
System (PNGTS) in connection with the partial settlement of the Calpine
Corporation bankruptcy.
    Adjusted net income for the Energy Services segment was $3.1 million for
the second quarter of the 2009 fiscal year and $4.5 million for the first six
months, which is respectively $0.4 million and $1.9 million higher than the
same periods for the previous fiscal year. The reasons for these gains are
higher earnings of some subsidiaries of Gaz Métro Plus Limited Partnership,
including Consulgaz Inc. and Climatisation et Chauffage Urbains de Montréal,

    (1) Adjusted net income excludes an unfavourable non-monetary adjustment
        of $0.6 million for the second quarter of the 2009 fiscal year
        ($1.3 million unfavourable for the first six months of the 2009
        fiscal year) and an unfavourable non-monetary adjustment of
        $0.5 million for the second quarter of the 2008 fiscal year
        ($1.7 million favourable for the first six months of the 2008 fiscal
        year), related to future income taxes.

    (2) Net of financing costs

    Segment Results - Net Income

                       3 months ended March 31       6 months ended March 31
    (in millions of
     dollars)         2009      2008    Change      2009      2008    Change
      Gaz Métro-QDA   96.4     102.9      (6.5)    157.2     161.7      (4.5)
      VGS and GMP      9.0       6.3       2.7      16.3      11.6       4.7
       costs of
       in this
       segment(1)     (1.1)     (1.4)      0.3      (2.4)     (2.5)      0.1
                     104.3     107.8      (3.5)    171.1     170.8       0.3
     of natural gas
      TQM, PNGTS
       and Champion
       Pipe Line
       Ltd            13.1      11.5       1.6      17.6      17.0       0.6
       costs of
       in this
       segment(1)     (1.0)     (1.4)      0.4      (2.2)     (2.5)      0.3
                      12.1      10.1       2.0      15.4      14.5       0.9
    Storage of
     natural gas
       (Intragaz)      1.5       1.3       0.2       3.2       2.8       0.4
       costs of
       in this
       segment(1)     (0.5)     (0.8)      0.3      (1.1)     (1.5)      0.4
                       1.0       0.5       0.5       2.1       1.3       0.8
    Energy services
     and other
      Energy, water
       fibreoptic      3.5       3.4       0.1       5.5       4.0       1.5
       costs of
       in this
       segment(1)     (0.4)     (0.7)      0.3      (1.0)     (1.4)      0.4
                       3.1       2.7       0.4       4.5       2.6       1.9
       project        (0.3)     (0.6)      0.3      (1.4)     (1.5)      0.1
       expenses       (0.6)      0.1      (0.7)     (0.9)      0.3      (1.2)
                      (0.9)     (0.5)     (0.4)     (2.3)     (1.2)     (1.1)
    Adjusted net
     income          119.6     120.6      (1.0)    190.8     188.0      (2.8)
       related to
       taxes(2)       (0.6)     (0.5)     (0.1)     (1.3)      1.7      (3.0)
    Net income       119.0     120.1      (1.1)    189.5     189.7      (0.2)

    (1) Financial expenses incurred by the Partnership to finance investments
        in the subsidiaries, joint ventures, and companies subject to
        significant influence of each segment.
    (2) Future income taxes that the Partnership will have to pay after
        October 1, 2010 with respect to Gaz Métro's subsidiaries and joint
        ventures that do not qualify as rate-regulated enterprises as defined
        in the Handbook of the Canadian Institute of Chartered Accountants.

    Income Distribution

    Gaz Métro inc., as the General Partner of Gaz Métro, today declared a
distribution of $0.31 per unit, payable on July 2, 2009, to Partners of record
at the close of business on June 15, 2009. Gaz Métro expects to maintain this
$0.31 per unit distribution level for the remainder of the 2009 fiscal year.

    Conference Call

    The Partnership will hold a telephone conference with financial analysts
on Friday, May 8, 2009, at 3:00 p.m. (Eastern time) to discuss its results for
the second quarter ended March 31, 2009. Sophie Brochu, President and Chief
Executive Officer, and Pierre Despars, Executive Vice President and Chief
Financial Officer, will be the main speakers. This will be followed by a
question period. Media and other interested individuals are invited to listen
    The conference can be accessed live by dialling 416-644-3428 or toll-free
1-800-590-1817. It will also be Webcast on Gaz Métro's Web site
( in the "Webcasts" section.
    Rebroadcasts can be accessed for 30 days by telephone at 416-640-1917 or
toll-free at 1-877-289-8525 (access code: 21304189#), and for 90 days on Gaz
Métro's Web site.

    Gaz Métro Overview

    With nearly $3.6 billion in assets, Gaz Métro is Quebec's leading natural
gas distribution company. Working in this regulated industry for over 50
years, Gaz Métro has become the trusted energy provider to over 180,242
customers in Quebec and 134,500 customers in Vermont while developing the
skills and expertise needed to diversify beyond natural gas. Gaz Métro's
prudent growth strategy has been met with the successful entry into
electricity distribution in Vermont and in the wind power sector. Offering
strong and stable distributions with a competitive spirit, Gaz Métro is
committed to its customers, unitholders, employees and community.


    Certain statements in this press release may be forward-looking pursuant
to applicable securities laws. Such forward-looking information reflects the
intentions, plans, expectations and opinions of the management of Gaz Métro
inc. (GMi), Gaz Métro's general partner, and are based on information
currently available to management and on assumptions with respect to future
events. The words "plans", "expects", "estimates", "forecasts", "intends",
"anticipates" or "believes", or similar expressions, including the negative of
these terms and future or conditional forms, often identify forward-looking
statements. Forward-looking statements involve known and unknown risks and
uncertainties and other factors outside management's control. A number of
factors could cause actual results of GMi and Gaz Métro to differ materially
from the results discussed in the forward-looking statements, including, but
not limited to, terms of decisions rendered by regulatory bodies, general
economic conditions, the competitiveness of natural gas in relation to other
energy sources, the reliability of natural gas supplies, the integrity of the
natural gas distribution system, exchange rates fluctuations and other factors
described in the 2008 Annual Information Form of each of Gaz Métro and GMi
under the item "Risks", and in the Management's Discussion and Analysis for
the period ended March 31, 2009. Although the forward-looking statements
contained herein are based upon what management believes to be reasonable
assumptions, including assumptions to the effect that no unforeseen changes in
the legislative and operating framework of energy markets in Quebec and in the
State of Vermont will occur, that no significant event occurring outside the
ordinary course of business, such as a natural disaster or other calamity,
will occur, and other assumptions described in the Management's Discussion and
Analysis for the period ended March 31, 2009, management cannot assure
investors that actual results will be consistent with these forward-looking
statements. These forward-looking statements are made as of this date, and
management assumes no obligation to update or revise them to reflect new
events or circumstances, except as required pursuant to applicable securities
laws. Readers are cautioned not to place undue reliance on these
forward-looking statements.


    In the view of Gaz Métro's management, certain "adjusted" indicators, such
as adjusted net income and adjusted net income per unit provide readers with
information it considers useful for analyzing its financial results. However,
they are not standardized in accordance with Canadian generally accepted
accounting principles (GAAP) and should not be considered in isolation or as
substitutes for other performance measures that are in accordance with GAAP.
The results obtained might not be comparable with similar indicators used by
other issuers and should therefore only be considered as complementary

                                     3 months ended          6 months ended
                                         March 31                March 31
    (in millions of dollars,
     except for unit data
     which is in dollars)           2009        2008        2009        2008
                              (unaudited) (unaudited) (unaudited) (unaudited)
    Revenues                   $   855.3   $   812.1   $ 1,571.1   $ 1,429.9
    Gross margin               $   273.2   $   255.5   $   499.9   $   461.3
    Income before interest,
     taxes and amortization    $   204.4   $   200.1   $   358.3   $   342.2
    Net income                 $   119.0   $   120.1   $   189.5   $   189.7
    Adjusted net income(1)     $   119.6   $   120.6   $   190.8   $   188.0
    Cash flows related to
     operating activities
     (before working capital)  $   203.3   $   174.7   $   358.7   $   303.1
    Capital expenditures       $    25.0   $    24.1   $    61.6   $    59.4
    Changes in deferred
     charges and credits       $     9.4   $    62.5   $    46.4   $   109.9
    Net income per unit
     (basic and diluted)       $    0.98   $    1.00   $    1.57   $    1.58
    Adjusted net income per
     unit (basic and
     diluted)(1)               $    0.99   $    1.00   $    1.58   $    1.56
    Distributions paid per
     unit to Partners of
     record on September 15
     and December 15           $    0.31   $    0.31   $    0.62   $    0.62
    Weighted average number
     of outstanding units (in
     millions)                     120.5       120.5       120.5       120.5
     (in millions of cubic
    Industrial                       753         871       1,478       1,909
    Commercial                       892         947       1,548       1,649
    Residential                      319         331         548         554
                              ----------- ----------- ----------- -----------
    Total                          1,964       2,149       3,574       4,112
    Authorized rate of return
     on deemed common equity
     (Quebec distribution
     activity)(3)                                           8.94%       9.52%
    Credit and Stability
      Long-term bonds (S&P/
       DBRS)(4)                                              A/A         A/A
      Commercial paper (S&P/
       DBRS)(4)                                         A-1(low)/   A-1(low)/
                                                        R-1(low)    R-1(low)
      Stability of
       distributions (S&P/
       DBRS)                                          SR-2/STA-2  SR-2/STA-2
                                                        (middle)    (middle)
    Market prices on Toronto
     Stock Exchange:
      High                     $   15.46   $   16.30   $   15.46   $   16.40
      Low                      $   12.69   $   14.50   $   10.63   $   13.77
      Close                                            $   14.26   $   15.56
    Public ownership in
     Partnership (non-
     controlling Partners)                                  29.0%       29.0%
    Interest coverage on
     long-term debt over a
     period of 12 months
     (times)                                                2.50        2.57
                                                           March   September
                                                              31,         30,
                                                            2009        2008
                                                      ----------- -----------
                                                      (unaudited)   (audited)

    Total assets                                       $ 3,567.9   $ 3,280.1
    Total debt                                         $ 1,763.0   $ 1,820.5
    Partners' equity                                   $ 1,100.0   $   942.0
    Partners' equity per unit                          $    9.13   $    7.82

    (1) Adjusted to exclude a $0.6 million unfavourable non-monetary
        adjustment relating to future income taxes for the second quarter of
        2009 ($1.3 million unfavourable adjustment for the first half of
        fiscal 2009) and a $0.5 million unfavourable adjustment for the
        second quarter or 2008 ($1.7 million favourable adjustment for the
        first half of fiscal 2008).
    (2) The market allocation method for Quebec volumes was modified as at
        September 30, 2008; comparative volumes were therefore restated to
        reflect the new allocation method.
    (3) Including the share of productivity gains and excluding the Global
        Energy Efficient Plan performance incentive.
    (4) Through its General Partner, Gaz Métro inc.

For further information:

For further information: Investors and analysts: Caroline Warren,
Investor Relations, (514) 598-3324; Media: Marie-Noelle Cano, Media and Public
Relations, (514) 598-3449

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