B.C. Hydro reported a $74-million first-quarter profit Thursday, some $232 million less than it earned in the same period last year.

The Crown company's earnings are far better than Hydro predicted earlier this year, when the utility tightened spending and warned it could lose money in 2001.

But they're in line with a more recent submission to B.C.'s finance ministry in which the utility forecast a $375-million profit on the year thanks to soaring electricity prices in United States markets early this fiscal year.

That estimate caught the new B.C. Liberal government by surprise; while in opposition the Liberals slammed the then-governing New Democratic Party's pre-election budget and its reliance on a $300-million Hydro profit forecast, saying such a high target was almost impossible.

Thursday's earnings report also shows that Hydro's energy purchase costs, for natural gas to fuel generators and for electricity from out-of-province, soared from $546 million in last year's first quarter to $1.9 billion this year.

Elisha Odowichuk, a B.C. Hydro spokeswoman, said the utility had to purchase more gas than usual at high prices to make up for low hydroelectric generation caused by low reservoirs.

She said the utility's reservoirs are now filled to 86 per cent of normal and Hydro will be able to use that water to generate inexpensive electricity later this fiscal year.

She said the utility also expects stronger domestic revenues this fall, as British Columbians crank up their heat.