(Quebec) Energy Minister Christine Fréchette wants to “find a balance” in the allocation of energy blocks, in response to criticism from opposition parties and the CEO of Hydro-Québec. But the industry representative says the Legault government has refused to allocate energy blocks to several decarbonization projects.
“It is important for us to ensure a good balance between Quebec and foreign companies, which we support and assist,” said Mr.me Fréchette during question period on Wednesday.
She was questioned by Liberal Frédéric Beauchemin, who was concerned to see that “SMEs are not the CAQ’s priority.”
“We will consider the economic benefits, the environmental impacts, in particular the social and socio-economic benefits. Regional development is also really at the heart of the analysis criteria,” said Mr.me Frechette.
In a context where energy demand is “very, very growing, because there is a craze to decarbonize the economy”, “we have to find a balance point”, she indicated.
The new superminister, who succeeds the resigning Pierre Fitzgibbon, did not wish to further explain her vision at the entrance to the parliamentary committee studying the Legault government’s energy bill.
Sabia Reviews
The day before, the CEO of Hydro-Québec had stolen the show by sending a hard-hitting message to his government. He criticized it for having given too much energy to new companies, foreign or not, to the detriment of the decarbonization of existing industries. “Cards on the table […]I think we need to rebalance things,” he said.
PHOTO EDOUARD PLANTE-FRÉCHETTE, THE PRESS
Hydro-Québec CEO Michael Sabia
According to Mr. Sabia, it is “essential” to use available energy to decarbonize existing industries in Quebec. In its plan, Hydro-Québec estimated that 75% of new energy would be allocated to decarbonization, to allow manufacturers to reduce their use of natural gas, propane or fuel oil by replacing these polluting energies with electricity.
But for now, energy is being used more to attract foreign companies, such as Northvolt.
Decarbonization projects rejected
On Wednesday, in parliamentary committee, Jocelyn Allard, the president of the Quebec Association of Industrial Electricity Consumers, confirmed that several of its members had been refused energy blocks intended for decarbonization projects.
“Many of the members were frustrated by seeing blocks that were not allocated to them. To do decarbonization projects, to achieve decarbonization objectives and replace natural gas with electricity. […] “It’s getting really difficult,” he said.
Since coming to power, the Legault government has changed the rules for allocating energy blocks, and it is the Minister of the Economy who chooses who can obtain electricity from projects of more than 5 megawatts. Mr. Allard believes that the criteria must be better defined. “We would like to have criteria developed, discussed publicly and that we can understand the why,” he said.
Fréchette attacks industrialists
In parliamentary committee, Minister Christine Fréchette also clashed with Mr. Allard on the issue of rates. The government’s plan, and that of CEO Michael Sabia, is to limit the increase in rates for Quebec consumers to a maximum of 3%, despite projected investments of $155 to $185 billion by 2035 to double its production and maintain its network. In return, businesses will pay more than inflation: 4 to 5% per year, Michael Sabia estimated on Tuesday.
This is called cross-subsidization, and it is a reality that already exists: businesses pay a higher rate than Hydro-Québec’s actual costs, and thus “subsidize” residential rates. This desire does not please businesses.
In addition, Bill 69 proposes to index electricity rates for the heritage block – energy produced by hydroelectric power plants built before the year 2000 – for industrial customers, as is already the case for SMEs and the residential sector.
For Mr. Allard, it’s risky: many companies are here because electricity is cheap, he said. In Quebec, salaries are higher, construction costs are higher, environmental standards cost more: factories are doing well because of the low cost of energy. The risk: by raising their bills, they risk losing contracts and, in the long term, being outclassed by the competition.
“If you tell me that the only way to remain competitive for your members and to have a business model that holds up, financially, is to be entitled to a rate that is not indexed over time, that worries me a little,” retorted Minister Christine Fréchette.
She said the Legault government wanted to apply “fair value” to electricity rates. “When I hear people tell us: ‘Well, you know, the infrastructure has been depreciated, it’s already paid for, so you should give it to us because it doesn’t cost you anything,’ well, it’s like letting go of the added value that this asset has gained for the benefit of Quebecers and transforming it into a donation to businesses,” she said.
She went so far as to say that the rate difference between industrialists and SMEs was “unfair, inequitable and unjust.” It should be noted, however, that the Legault government has granted several of these large companies a 20% discount on their electricity bill, sometimes until 2032.
On the SME side, the mood was not good either. François Vincent, vice-president, Quebec for the Canadian Federation of Independent Business, believes that the Legault government, with its legislative changes in recent years, has unnecessarily politicized electricity pricing.
Mr. Vincent believes that “cross-subsidization” needs to be reduced, as he considers it unfair. “It’s the SMEs that pay for everyone. The bill doesn’t fix that, it just tones it down a bit. When the Prime Minister says that it’s the businesses that will pay, what does that mean? It’s the SMEs that will pay the price for this policy.”