Gaz Métro reports solid results for 2009 fiscal year

    Favourable competitive situation for natural gas and diversity of
    operations contribute to strong financial performance
<p><location>MONTREAL</location>, <chron>Nov. 18</chron> /CNW Telbec/ - Gaz Métro Limited Partnership (TSX: GZM.UN, Gaz Métro) ends its 2009 fiscal year with adjusted net income of <money>$159.6 million</money>, or <money>$1.32</money> per unit, which is <money>$6.3 million</money>, or <money>$0.05</money> per unit higher than the previous fiscal year(1).</p>
<p>"We are proud to report solid financial results to our Partners. Even though Gaz Métro is not immune to the vagaries of the global economic situation, it is doing quite well in these turbulent times. Relying on its commercial agility, the Partnership has taken full advantage of business opportunities provided by the competitive position of natural gas in <location>Quebec</location> for several quarters, in particular in the industrial market where it has dislodged heavy fuel oil. In 2009, Gaz Métro also reaped the rewards of its prudent targeted diversification strategy of its markets and activities", said <person>Sophie Brochu</person>, President and Chief Executive Officer.</p>
<p>"Our interest in the Trans Québec & Maritimes Pipeline transmission system, for which the National Energy Board approved a substantial adjustment of the rate of return on equity during the fiscal year, was an important contributor to our strong performance in 2009. This is also true of Green Mountain Power Corporation, the second largest electricity distributor in Vermont that we acquired in 2007, which itself generated net income before financing costs of <money>$15.7 million</money>, representing nearly 10% of our net income", added <person>Sophie Brochu</person>.</p>
<p>"Following our strategy of investing in complementary infrastructure, we are resolutely pursuing our wind power projects. This year, these projects received the environmental permits they required to go ahead, thereby reaching another milestone towards making long-term value a reality for our Partners", concluded <person>Sophie Brochu</person>.</p>
<p>Income Distribution</p>
<p>Gaz Métro distributed <money>$0.31</money> per unit in each quarter of the 2009 fiscal year, for a total of <money>$1.24</money> per unit, the same level as in the 2008 fiscal year. It also paid a distribution of <money>$0.31</money> per unit to Partners last <chron>October 1</chron>.</p>
<p>Gaz Métro today declared a distribution of <money>$0.31</money> per unit, payable on <chron>January 5, 2010</chron>, to Partners of record at the close of business on <chron>December 15, 2009</chron>. Gaz Métro expects to pay distributions of <money>$0.31</money> per unit in each quarter of the 2010 fiscal year.</p>
<p>Segment Analysis</p>
<p>Vermont Energy Distribution</p>
<p>Net income from Vermont Energy Distribution was up <money>$5.1 million</money>(2) for the 2009 fiscal year, in spite of lower electricity volumes distributed by Green Mountain Power Corporation (GMP). This solid performance is due, among other things, to the increase in revenues from GMP's interest in Vermont Transco LLC, which transports electricity, the appreciation of the U.S. dollar in relation to the Canadian dollar and higher natural gas deliveries by Vermont Gas Systems, Inc. (VGS) as a result of relatively colder temperatures than the previous fiscal year.</p>
<p><location>Quebec</location> Natural Gas Distribution (Gaz Métro-QDA)</p>
<p>In <location>Quebec</location> during the 2009 fiscal year, Gaz Métro-QDA signed 6,196 new contracts, bringing the number of customers to 179,370 as at <chron>September 30, 2009</chron>. The new housing penetration rate of natural gas was 19% in the Greater <location>Montreal</location> area. New customer satisfaction rate in <location>Quebec</location> remained high at 92%.</p>
<p>The main reason for the 1.8% reduction in natural gas volumes in the residential market was energy conservation initiatives. Gaz Métro encourages those initiatives through energy efficiency programs while keeping investors' expectations in mind. In accordance with its regulatory framework, Gaz Métro-QDA therefore earned the total performance incentive of <money>$4.0 million</money> in 2009, as it did in 2008, from the achievement of its corporate energy efficiency objectives.</p>
<p>In the commercial market, the economic recession was the main contributor to the 3.0% reduction in natural gas volumes compared to last year. The 19.9% volume reduction in the industrial market during the 2009 fiscal year was mainly in the metallurgy, refining, petrochemical and electricity production sectors.</p>
<p>Overall, Gaz Métro-QDA's net income was down <money>$7.2 million</money>, mainly on account of the 0.58% reduction in the rate of return, including anticipated productivity gains, authorized for the 2009 fiscal year compared to the 2008 fiscal year and the reduction in income and capital taxes, which are included in rates charged to customers and subsequently assumed by the Partners. These items are partially offset by the increase in the share of the overearnings arising mainly as a result of higher revenues from short-term interruptible service sales at higher average prices than during the previous fiscal year due to the more favourable competitive position of natural gas compared to heavy fuel oil.</p>
<p>Transportation of Natural Gas</p>
<p>Net income from the Transportation segment was up <money>$0.3 million</money> for the 2009 fiscal year, mainly because of the recognition, in the second quarter, of the retroactive <money>$6.7 million</money> favourable impact of a rate adjustment the National Energy Board approved on <chron>March 19, 2009</chron> for Trans Québec & Maritimes Pipeline Inc. (TQM) for its 2007 and 2008 fiscal years, as well as interest income of <money>$0.8 million</money> related to that rate adjustment. These favourable items are mitigated by lower earnings in <location>Portland</location> Natural Gas Transmission System (PNGTS) and the non-recurring <money>$5.3 million</money> after-tax gain recorded in PNGTS during the 2008 fiscal year in connection with the partial settlement of the bankruptcy of Calpine Corporation, one of its former large customers.</p>
<p>Storage of Natural Gas</p>
<p>Adjusted net income(3) for the Storage segment was up <money>$1.1 million</money> for the 2009 fiscal year, mainly on account of a slight indexing of rates and a reduction in financial expenses, reflecting lower interest rates.</p>
<p>Energy Services and Other</p>
<p>Adjusted net income(3) for the Energy Services segment was up <money>$6.6 million</money> for the 2009 fiscal year, mainly because of improved profitability for some subsidiaries of Gaz Métro Plus Limited Partnership, including Consulgaz Inc., Climatisation et Chauffage Urbains de Montréal, s.e.c. and HydroSolution L.P.</p>
<p>Development Projects</p>
<p>In connection with the Seigneurie de Beaupré wind power projects, on <chron>July 7, 2009</chron>, Gaz Métro and its partner, Boralex Inc., obtained a decree from the Government of <location>Quebec</location>, on the recommendation of the provincial ministry of natural resources (ministère des Ressources naturelles et de la Faune), authorizing two projects with a total installed capacity of 272 megawatts. The two wind farms should be put in service no later than <chron>December 1, 2013</chron> on Seigneurie de Beaupré lands, which are owned by the Séminaire de Québec. Having achieved this important environmental milestone, the consortium may now proceed with the other planned stages of the projects.</p>
<p>In terms of the natural gas supply diversification initiatives, the timetable for the proposed liquefied natural gas terminal has been extended as external factors and uncertainties in the financial, commodity and construction markets have slowed discussions between the project's partners and Gazprom Marketing & Trading USA, Inc. In Gaz Métro's view, a correction in the economic situation is to be expected, but it does not foresee the signing of final agreements in the short term.</p>
<p>Quarterly Results</p>
<p>Given the seasonal nature of its operations and the normally low demand for energy during the summer months, Gaz Métro has always incurred a loss during the fourth quarter of its fiscal year. The adjusted net loss(3) for the fourth quarter of the 2009 fiscal year is <money>$36.7 million</money>, compared to <money>$39.5 million</money> for the corresponding period of the previous fiscal year, an improvement of <money>$2.8 million</money>. The adjusted net loss per unit is <money>$0.31</money> in the fourth quarter of the 2009 fiscal year, compared to <money>$0.32</money> in the fourth quarter of the previous fiscal year, an improvement of <money>$0.01</money> per unit.</p>
    (1) Adjusted net income excludes an unfavourable non-monetary adjustment
        of $1.1 million related to future income taxes for the 2009 fiscal
        year (favourable non-monetary adjustment of $1.1 million for the 2008
        fiscal year).
    (2) Net of financing costs
    (3) Adjusted net income (adjusted net loss) excludes non-monetary
        adjustments related to future income taxes.

    Segment results - Net income (loss)

                                  3 months ended        Fiscal years ended
                                  September 30(1)          September 30
    (in millions of dollars)   2009    2008  Change    2009    2008  Change
    Energy distribution
      Gaz Métro-QDA           (41.3)  (38.7)   (2.6)  118.1   125.3    (7.2)
      VGS and GMP               3.6     3.6     0.0    22.4    17.2     5.2
      Financing costs of
       investments in this
       segment(2)              (1.4)   (1.2)   (0.2)   (4.9)   (4.8)   (0.1)
      Adjusted net income
       (loss)                 (39.1)  (36.3)   (2.8)  135.6   137.7    (2.1)
    Transportation of
     natural gas
      TQM, PNGTS and
       Champion Pipe Line
       Corporation Ltd          2.0     2.9    (0.9)   22.8    22.8     0.0
      Financing costs of
       investments in this
       segment(2)              (1.3)   (1.1)   (0.2)   (4.4)   (4.7)    0.3
      Adjusted net income       0.7     1.8    (1.1)   18.4    18.1     0.3
    Storage of natural gas
      Intragaz Group
       (Intragaz)               1.7     1.5     0.2     6.6     6.1     0.5
      Financing costs of
       investments in this
       segment(2)              (0.6)   (0.5)   (0.1)   (2.0)   (2.6)    0.6
      Adjusted net income       1.1     1.0     0.1     4.6     3.5     1.1
    Energy services and other
      Energy, water and
       fibreoptic               2.0    (3.0)    5.0     6.7     0.8     5.9
      Financing costs of
       investments in this
       segment(2)              (0.6)   (0.7)    0.1    (2.0)   (2.7)    0.7
      Adjusted net income
       (loss)                   1.4    (3.7)    5.1     4.7    (1.9)    6.6
    Non-allocated expenses
      Rabaska project          (0.2)   (0.9)    0.7    (1.8)   (2.9)    1.1
      Other expenses           (0.6)   (1.4)    0.8    (1.9)   (1.2)   (0.7)
                               (0.8)   (2.3)    1.5    (3.7)   (4.1)    0.4
    Adjusted net income
     (loss)                   (36.7)  (39.5)    2.8   159.6   153.3     6.3
    Non-monetary impact
     related to future
     income taxes(3)            0.4    (0.6)    1.0    (1.1)    1.1    (2.2)
    Net income (loss)         (36.3)  (40.1)    3.8   158.5   154.4     4.1

    (1) Operating results for interim periods are not necessarily
        representative of the results that are expected for the fiscal year.
        Seasonal variations in temperatures have an impact on the
        Partnership's interim financial results, particularly in the fourth
        quarter of the fiscal year when Gaz Métro has always had a loss
        because of the normally low demand for energy during the summer
    (2) Financial expenses incurred by the Partnership to finance investments
        in the subsidiaries, joint ventures, and companies subject to
        significant influence of each segment.
    (3) Adjustment related to the future income taxes that the Partnership
        will have to pay in periods 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.
<p>Conference Call</p>
<p>The Partnership will hold a telephone conference with financial analysts on <chron>Wednesday, November 18, 2009</chron>, at <chron>4:00 p.m. (Eastern time</chron>) to discuss its results for the fiscal year ended <chron>September 30, 2009</chron>. <person>Sophie Brochu</person>, 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 in.</p>
<p>The conference can be accessed live by dialling 416-644-3426 or toll-free 1-800-731-5319. It will also be Webcast on Gaz Métro's Web site (<a href=""></a>) in the "Webcasts" section.</p>
<p>Rebroadcasts can be accessed for 30 days by telephone at 416-640-1917 or toll-free at 1-877-289-8525 (access code: 4179945#), and for 90 days on Gaz Métro's Web site.</p>
<p>Gaz Métro Overview</p>
<p>With over <money>$3.3 billion</money> in assets, Gaz Métro is Quebec's leading natural gas distributor. Operating in this regulated industry for over 50 years, Gaz Métro has become the trusted energy provider to some 180,000 customers in <location>Quebec</location> and 136,000 customers in Vermont while developing the skills and expertise needed to diversify beyond natural gas. Gaz Métro's prudent growth strategy has been marked by the successful entry into electricity distribution in Vermont and development of wind power projects in <location>Quebec</location>. Offering historically strong and stable distributions with a competitive spirit, Gaz Métro is committed to its customers, Partners, employees and the community. Gaz Métro's units are listed on the <location>Toronto</location> Stock Exchange under the symbol GZM.UN.</p>
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<p>Cautionary note regarding forward-looking statements</p>
<p>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 is 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 Gaz Métro and GMi 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 Annual Information Form of each of Gaz Métro and GMi under the item "Risks", and in the Management's Discussion and Analysis of each of Gaz Métro and GMi for the fiscal year ended <chron>September 30, 2009</chron>. 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 <location>Quebec</location> 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 of each of Gaz Métro and GMi for the fiscal year ended <chron>September 30, 2009</chron>, 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.</p>
<p>Adjusted indicators not standardized in accordance with GAAP</p>
<p>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 information.</p>

    Years ended September 30
    (in millions of dollars, except for
     unit data which are in dollars)               2009                2008
    Revenues                                  $ 2,250.4           $ 2,171.9
    Gross margin                              $   771.2           $   710.0
    Income before interest, taxes
     and amortization                         $   482.3           $   452.1
    Net income                                $   158.5           $   154.4
    Adjusted net income(1)                    $   159.6           $   153.3
    Cash flows related to operating
     activities (before working
     capital)                                 $   425.4           $   413.0
    Capital expenditures                      $   151.9           $   135.5
    Variations in deferred charges
     and credits                              $   129.6           $   179.2
    Net income per unit (basic
     and diluted)                             $    1.32           $    1.28
    Adjusted net income per unit
     (basic and diluted)(1)                   $    1.32           $    1.27
    Distributions paid per unit               $    1.24           $    1.24
    Return on average equity                       15.5 %              15.7 %
    Return on adjusted average
     equity(1)                                     15.2 %              15.2 %
    Weighted average number of
     outstanding units (in millions)              120.5               120.5
    Interest coverage on
     consolidated long-term debt
     over a period of 12 months
     (times)                                       2.52                2.49
     (in millions of cubic metres)
    Industrial                                    2,489               3,089
    Commercial                                    2,200               2,265
    Residential                                     689                 695
                                              -----------         -----------
    Total                                         5,378               6,049
    Authorized rate of return on
     deemed common equity (Quebec
     distribution activity)                        8.94 %              9.52 %
    Realized rate of return on
     deemed common equity (Quebec
     distribution activity)(3)                     9.89 %             10.45 %
    Credit ratings
      First mortgage bonds(2)
       (S&P/DBRS)                                   A/A                 A/A
      Commercial paper(2) (S&P/DBRS)   A-1(low)/R-1(low)   A-1(low)/R-1(low)
      Stability of distributions
       (S&P/DBRS)                     SR-2/STA-2(middle)  SR-2/STA-2(middle)
    Market prices on Toronto Stock
     Exchange (in dollars):
      High                                    $   16.19           $   16.40
      Low                                     $   10.63           $   13.77
      Close                                   $   15.81           $   14.60
    Public ownership in Partnership
     (non-controlling Partners)                    29.0 %              29.0 %
    Total assets                              $ 3,306.8           $ 3,286.5
    Total debt                                $ 1,769.8           $ 1,820.5
    Partners' equity                          $   949.6           $   942.0
    Partners' equity per unit                 $    7.88           $    7.82

    (1) Adjusted to exclude the $1.1 million unfavourable non-monetary
        adjustment to future income taxes in the 2009 fiscal year
        ($1.1 million favourable in 2008).
    (2) Through its General Partner, Gaz Métro inc.
    (3) The 2009 realized rate of return is subject to the approval of the
        Régie de l'énergie and the 2008 rate has been adjusted following the
        Régie de l'énergie's decision in July 2009.

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

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