Messages from our Chairman and our President and CEO

Pierre Monahan Picture

Front and centre
Higher dividend

Pierre Monahan
Chairman of the Board of Directors
We aim for relevance, constant and patient progress, and sustainable solutions. Thanks to this well-considered, strategic approach, we can confirm a 4% annual increase in our shareholders’ dividend for 2015 and a growth target of approximately 4% for the next three years. Message from Pierre Monahan
Pierre Monahan Picture
Pierre Monahan
Chairman of the Board of Directors

Since its creation, Valener has said what it plans to do and done what it says. We don’t try to “wow” people. We aim for relevance, constant and patient progress, and sustainable solutions. Thanks to this well-considered, strategic approach, we can confirm a 4% annual increase in our shareholders’ dividend for 2015 and a growth target of approximately 4% for the next three years.

Valener–Gaz Métro alliance

Valener is the public investment vehicle of Gaz Métro, a Quebec energy and sustainable development flagship. Our investment in Gaz Métro remains our main development driver, and the prospects for growth are bright, as shown in the “Highlights” section of this report. In short, natural gas is a popular form of energy, and Gaz Métro is a respected company with inspired growth initiatives.

Valener is thus built on solid foundations. Despite the sharp drop in oil prices, natural gas remains the least expensive form of energy in most market segments. Gaz Métro’s business model protects the company from price fluctuations: profits are not generated by the sale of natural gas, which is sold at cost, but by gas distribution. This operating structure contributes to Gaz Métro’s financial stability.

Gaz Métro targets “smart” growth in both its traditional activities and new and renewable forms of energy. Like Valener, Gaz Métro is reaping the rewards of its investment in the Seigneurie de Beaupré wind farms, which is an operational and financial success. At the same time, Gaz Métro’s operations in Vermont continue to generate the anticipated annual growth, while the depreciation of the Canadian dollar versus the U.S. currency means a substantial rise in the company’s profits from operations south of the border.

Key value creation

Valener inspires market confidence. Our shares are among a handful of energy-sector securities that rose in value during this year of adversity. Excluding non-recurring items, Valener posted $45.3 million in adjusted net income attributable to common shareholders in 2015, up $8.6 million from the previous fiscal year.

Increasingly solid financial position

Despite the increase in its distributions, Valener continues to enjoy a high level of cash flows, and its overall financial position is moving in the right direction. During the fiscal year, Valener positioned itself for future investments by renewing a $200 million credit facility for five years, after having increased its net investment in Gaz Métro by acquiring $74 million in new units.

As for revenues, 2015 was a good year. Our direct interest in the Seigneurie de Beaupré wind farms turned out to be a particularly profitable investment over the past 12 months. In 2015, revenues from sales of wind power to Hydro-Québec were 25% above forecast, thanks essentially to favourable winds. The quality of this investment is one of the factors that allows us to increase our common dividend.

Ready for Next?

Valener is truly proud of its association with Gaz Métro. We want to reiterate our full confidence in the company’s President and CEO, Sophie Brochu, her management team and all of the employees who have shown their commitment to the future by launching an inspiring public discussion under the theme “Ready for Next?”.

Valener endorses this invitation to build a better future in partnership with Gaz Métro, create value for shareholders and contribute positively to social progress.

This vision is driven by Valener’s shareholders. We thank them for their trust.

Sophie Brochu Picture

Front and centre
We focus on energy in the long term

Sophie Brochu
President and Chief Executive Officer
Gaz Métro
This vision of our role as a diversified and modern energy company has spawned ongoing improvements in our financial performance, which we see as a just reward for work well done, not the fleeting effect of short-sighted decisions. Message from Sophie Brochu
Sophie Brochu Picture
Sophie Brochu
President and Chief Executive Officer
Gaz Métro

We live in a fast-changing world, where transformations are swift and innovations follow one another in rapid succession. In this complex ecosystem, companies have to be twice as careful to avoid focusing exclusively on their next-quarter results. Gaz Métro is well aware of this. We believe in a vision of strategic development set in the long term. We want our efforts as an energy solutions supplier to be meaningful and to contribute to progress. We want to achieve our goal of supporting our customers’ success. We want our initiatives to be socially acceptable, and we want to play a part in the fight against climate change.

The validity of this long-term development vision was confirmed in a number of ways in 2015, as longstanding, carefully prepared projects reached their deployment phase.

As a natural gas distributor, we are pleased by the progress we have made in expanding our network in the Bellechasse area. Supported by community stakeholders, this 71-kilometre extension has been on the drawing board for over 10 years. The project has now reached the stage of final approval by the Régie de l’énergie. It will allow us to extend the environmental and economic advantages of natural gas to about a hundred clients – businesses, schools and municipal buildings – between Lévis and Sainte-Claire. The arrival of natural gas in this corridor will reduce greenhouse gas emissions by at least 8,600 tonnes per year and generate some $2.5 million in savings for public institutions and businesses, helping them consolidate their competitive position and capacity for sustainable development.

In 2015, Gaz Métro saw one of its largest investment projects in recent years take shape, with the launch of a huge worksite. In partnership with Investissement Québec, we devoted approximately $118 million to triple the capacity of our liquefaction plant in the east end of Montreal. The plant expansion will enable a growing number of consumers to enjoy the economic and environmental advantages of liquefied natural gas. LNG is a promising solution for replacing fuel oil and diesel in the road and maritime transportation sectors, and for supplying communities and industrial sites located far from our network.

Under the heading of renewable energy, the Régie de l’énergie rendered an important decision in 2015, allowing the connection of our network to the City of Saint-Hyacinthe’s new biomethane production plant. As a pioneer in this area in Quebec, Gaz Métro contributed to this concrete example of sustainable development, which consists in converting agricultural and household waste into useful energy. This “home-grown,” renewable natural gas will be distributed via our network, for the benefit not only of our customers, but of society as a whole. The success of this ground-breaking initiative encourages us to repeat the approach with other innovative municipalities as soon as possible.

Our contribution to the rise of renewable energy is longstanding and ongoing, as shown by our participation in the Seigneurie de Beaupré wind farms. Gaz Métro and Valener are partners in this project, along with Boralex. Since their start-up in 2013, our wind-power assets have performed beyond our expectations as a shareholder and those of our customer, Hydro-Québec, with which we have signed a 20-year agreement.

In Vermont, Gaz Métro continues to support the growth of its subsidiaries Vermont Gas Systems and Green Mountain Power, which distribute all of the state’s natural gas and 70% of its electricity, most of which comes from renewable sources, such as hydroelectricity, wind power, solar energy, and cow power.

We also hope to supply more business and residential clients in Vermont with natural gas. In 2014, Vermont Gas Systems (VGS) began construction of its network development project to serve the communities of Vergennes and Middlebury. The project will ultimately double the size of VGS’s current assets.

Gaz Métro is an active and engaged corporate citizen. In 2015, it participated in public consultations on Quebec’s new energy policy and the setting of our collective greenhouse gas reduction target for 2030. We believe that if energy companies are part of the problem, they are also part of the solution.

On the Canadian stage, Gaz Métro didn’t hesitate to join forces with its Ontario partners in order to protect Quebec consumers’ economic and environmental interests. Our efforts were successful: we obtained the assurance that central Canada’s natural gas supplies will be protected if the Energy East oil pipeline project goes ahead.

These are good examples of our vision of the future, according to which our company’s growth will be aligned with economic, social and environmental progress.

Gaz Métro is paving the way to a brighter tomorrow. In December 2015, our company took part in the United Nations Climate Change Conference in Paris, alongside businesses, environmental groups and government representatives. In the same spirit, in keeping with our commitment to be part of the solution, we voiced our conviction throughout the year that Canada needs to adopt a national energy vision, while respecting provincial jurisdictions.

“Ready for Next?” has become the leitmotiv of a public discussion launched by Gaz Métro employees, who invited all civil society stakeholders to express their views on the themes of energy, the future and responsibility.

This vision of our role as a diversified and modern energy company has spawned ongoing improvements in our financial performance, which we see as a just reward for work well done, not the fleeting effect of short-sighted decisions.

We are proud that deployment of our strategy has contributed to higher dividends for our shareholders. Thanks to our shareholders’ support, Gaz Métro has become a modern energy company and a flagship of the Quebec economy.

Thank you.

Financial Performance

Rise in dividend High return
Annualized dividends rose by 4% during fiscal 2015, to $1.04 per common share.
Proportional representation on the Gaz Métro Inc. Board of Directors.
Dividend Reinvestment Plan with a current discount of 2% on new shares issued.
Increase of approximately + 4% in dividends paid to common shareholders for each of the fiscal years
2016, 2017 and 2018.
Gaz Métro
Recurring distributions
Valener receives 29% of Gaz Métro’s solid and stable distributions.
Since 1993, 98.3% of Gaz Métro’s net income has been distributed.
Increase in the quarterly distribution from $0.28 to $0.29 per unit, as of the next distribution on January 5, 2016.
Gaz Métro Net income attributable to Partners (excluding non-recurring items) 2014: $174.7 million
2015: $192.4 million
+ 10.1%
Valener Adjusted net income attributable to common shareholders 2014: $36.7 million
2015: $45.3 million
+ 23.4%
Normalized operating cash flows 2014: 38.8 million
2015: 58.6 million
+ 51.0%

Using natural gas to replace fuel oil and diesel enables an immediate reduction in greenhouse gas emissions of up to 32% and 25%, respectively.

The advantageous exchange rate for energy distribution activities in Vermont and favourable wind conditions at the Quebec wind farms had a positive impact on revenues and net income.

Gaz Métro-QDA: Renewal of the 8.90% authorized rate of return on deemed common equity for fiscals 2016 and 2017.

Gaz Métro and the Government of Quebec are investing $118 million to triple the volume of LNG produced at the LSR plant.

$17.7 million increase in consolidated net income attributable to Partners, excluding non-recurring items.

Gaz Métro-QDA: 9.09% realized rate of return on deemed common equity attributable to overearnings realized by the distribution service.


Synergies generated by the merger of Green Mountain Power (GMP) and Central Vermont Public Service (CVPS) exceeded expectations for 2015 and 2014.

23.4% increase in adjusted net income and 51.0% increase in normalized operating cash flows.

4% increase in the annualized dividend in 2015, and annual growth target of approximately 4% in 2016 and 2017.

Valener Initial distributions:

Wind Farms 2 and 3:
$4.7 million (February 2015)
$5.2 million (August 2015)
Wind Farm 4:
$4.3 million (September 2015)

$4.2 million increase in the share in the net income of Beaupré Éole as a result of to the strong performance of Wind Farms 2 and 3 and favourable wind conditions.

2015 Operational Highlights

Front and centre
Our dynamic sources of energy

About Gaz Métro

With more than $6 billion in assets, Gaz Métro is a leading energy provider. It is the largest natural gas distribution company in Quebec, where its network of over 10,000 kilometres of underground pipelines serves more than 300 municipalities and more than 195,000 customers.

Gaz Métro is also present in Vermont, producing electricity and distributing electricity and natural gas to meet the needs of more than 305,000 customers.

Gaz Métro is actively involved in the development and operation of promising, innovative energy projects focusing on areas such as natural gas as fuel and liquefied natural gas as a replacement for higher emission-producing forms of energy, wind power production and the development of biomethane.

  • Natural gas distribution network in Quebec
    Natural gas distribution network in Quebec
    of underground pipes
    More than 300 municipalities served
    195,000 customers industrial, commercial, institutional and residential
  • Seigneurie de Beaupré wind farms
    Seigneurie de Beaupré wind farms
    154 wind turbines 340 megawatts of installed capacity
    Electricity for 65,000 homes
  • Saint-Hyacinthe biomethane plant
    Saint-Hyacinthe biomethane plant
    Stakeholders supporting the city of Saint-Hyacinthe
    Annual production of 13 million cubic metres of biomethane, a local energy produced rom organic matter, fully interchangeable with natural gas
    25,000-tonne reduction in greenhouse gas emissions per year
    Natural gas-powered fleet of municipal vehicles
  • Liquefaction, storage and regasification (LSR) plant
    Liquefaction, storage and regasification (LSR) plant
    Quebec’s only liquefied natural gas (LNG) plant
    Work under way to triple liquefaction capacity to 9 Bcf
    Starting in the fall of 2016, LNG deliveries to customers in a radius of over 1,000 kilometres
  • Natural gas distribution network
    Natural gas distribution network
    100% of Vermont’s natural gas customers
    50,000 customers commercial, institutional and residential
  • Electricity distribution network
    Electricity distribution network
    70% of Vermont’s electricity distribution
    260,000 customers commercial and residential
    Renewable energy production (hydroelectricity, solar energy, wind power and cow power)
  • Solar energy
    Solar energy
    7.87 megawatts of installed capacity
  • Cow power
    Cow power
    Production of 1.6 million
    of electricity
    Partnership with ≈ a dozen farms
  • Wind power
    Wind power
    2 wind farms 69 megawatts of installed capacity

Sustainable Development

Front and centre
Because we believe

Supplier code of conduct

With the publication of its Sustainable Development Roadmap in 2012, Gaz Métro committed itself to influence its suppliers, among other ways through its procurement approach.

The actions launched include a Supplier Code of Conduct, released in April 2015. The code sets forth the behaviours expected of Gaz Métro's suppliers, in light of sustainable development and responsible business best practices. As a parallel initiative, the company developed and published a Gaz Métro Authorized Partners code of conduct.

Last but not least, current and potential gas suppliers are assessed according to the criteria used to select goods and services suppliers. This approach allows Gaz Métro to favour suppliers who, for the same price, have a better eco-responsibility rating. View the PDF

Participating in the shift
to a green economy

The mission of the Switch alliance is to speed up the transition to a green economy in Quebec, with a view to building an innovative, resilient and competitive society that reconciles social equity, environment and quality of life. Switch is a unique initiative that brings together businesspeople and environmental activists, who join forces to achieve progress. Gaz Métro is proud to be a member of the advisory committee and to take part in the depolarization of the environment and the economy by actively supporting cooperation in the quest for solutions and consensus.

The energy sector plays a key role in the shift to a green economy. We do so, among other ways, by offering innovative energy efficiency solutions, reducing the transportation sector’s environmental footprint and developing renewable forms of energy.

In 2015, Sophie Brochu co-chaired the Canadian Roundtable on the Green Economy, held by Switch, aimed at identifying key factors for speeding up the shift to a green economy in Canada. The participants agreed on the importance of putting a price on carbon and promoting sustainable urban development. Our leaders also sat on committees focusing on social innovation, ecological taxation, government contracts (responsible procurement) and green economy jobs.

Participation in Quebec government consultations on climate change

Gaz Métro is a member of the climate change advisory committee established by Quebec’s Minister of Sustainable Development, the Environment and the Fight Against Climate Change. Among other issues, the committee studied the recommendations regarding Quebec’s GHG reduction targets for 2030. Gaz Métro also took part in the consultation process, making a presentation and submitting a brief.

Women’s solidarity event
draws over 1,000 participants

In March 2015, over 1,000 people took part in an event dubbed “Soupe Pour Elles,” organized by Sophie Brochu and a number of people from her Gaz Métro team, for the benefit of the organization La Rue des Femmes. The event inspired women’s solidarity and highlighted the essential work of La rue des Femmes in helping our society’s most vulnerable women.

Image 'Soupe pour elles'


Front and centre
Our employees

Ethics: A shared priority

At Gaz Métro, ethics are a priority and an area of ongoing reflection. Activities such as interactive training and talks are held for employees. In 2015, the company carried out a periodic update of its code of ethics, with a view to ensuring that the code remains a relevant reference tool and a guide that helps Gaz Métro employees identify grey areas, ask the right questions, openly discuss ethical issues and adopt appropriate behaviours.

View the PDF

Attracting and retaining talent

Above all, Gaz Métro is men and women who care about their work. They are the company’s driving force and best ambassadors. As an employer, Gaz Métro has adopted a variety of means to mobilize talent and offer its employees advantageous working conditions.

In 2015, Gaz Métro introduced its first total compensation statement. This personalized tool shows employees the benefits (monetary and other) of working for the company. Among other goals, the approach is aimed at stimulating employees’ pride and feeling of belonging.

For over a decade, in order to offer the necessary conditions for high-quality work, Gaz Métro has conducted an employee survey every two years. In 2015, the survey findings were described as exceptional by the KPMG-SECOR experts. The 85% participation rate assured us that the findings were representative, and the mobilization index was 42, compared with 38 in 2013. With this significant progress, Gaz Métro has entered the zone of excellence and became the first organization of its size to post a performance of this calibre.

360 degrees of awareness: Cultivate, prevent and humanize

Launched in 2012 and focusing primarily on promoting psychological health, the 360° d’attention (“360-degree awareness”) campaign maintained its momentum in 2015. In addition to creating conditions for cultivating well-being and promoting quality of life, the company has consolidated its support structure by focusing on the human factor. In this spirit, close to 200 managers received training on prevention and on developing their employees’ ability to intervene in the area of psychological health. Implemented during the year, an informal mutual help network made up of management personnel who are trained and equipped to support and guide their co-workers helped reinforce the protection net and further humanize the workplace.