An increase in electricity prices is inevitable, warns Energy Minister Pierre Fitzgibbon

Although Prime Minister François Legault promised to limit the increase in residential rates to 3%, “over time” service costs will inevitably increase, warns the Minister of Energy.

The question is political, but Minister Pierre Fitzgibbon admits that an increase in rates would allow Hydro-Québec to have better room for maneuver.

“There is enormous pressure on Hydro-Québec,” he said in an interview with our Parliamentary Office.

Minister Fitzgibbon conceded that the tariffs “stick” will be used naturally, in the long term.

“Education first, certain incentive measures, then the stick… the cost of service will increase over time anyway,” he admitted, however reiterating the Prime Minister’s promise to keep prices low in the residential sector.

In the short term, he said, “it’s 3% [d’augmentation] maximum” because he does not want to divert the debate on the future of energy. The commercial and industrial sector could suffer quickly. But one day people will inevitably pay more for kilowatt hours, he points out.

“There will be an evolution in Quebec. But, people are not ready for that because there hasn’t been a lot of good work done on educating people,” he said.

“We’ll start like this.”

Competitive rates

The vice-president at Hydro-Québec, Dave Rhéaume, indicates that “it is certain that rates will be on an upward slope.”

However, he argues, the state-owned company must make investments to improve energy efficiency and meet growing electricity needs, but while avoiding increasing prices.

“We think the prices in Quebec are part of the social pact. Rates in Quebec must maintain a competitive advantage compared to other jurisdictions, everywhere in the world where there will be the energy transition,” he maintained. However, he adds that there will be upward pressure.

“We don’t deny it […] What we want is to make sure we control this increase so that it remains acceptable and for the ability to pay.”

However, current rates may not adequately reflect high consumption levels. A change in behavior is needed, especially for very wealthy consumers, he says.

Having the rich pay

In an interview, he mentioned the possibility of setting up differentiated prices depending on the level of consumption, in particular for large energy consumers, who have swimming pools with water heaters, entrances with heated asphalt, huge rooms in the house, etc.

It suggests that those who consume excessively could be subject to higher tariffs.

“These people must [les gros consommateurs] have the stronger signal,” he explains, maintaining that this is about 1% of customers.

“Clearly, these are people who are very, very well off. We’re not talking about the upper middle class.”

In one way or another, it is Quebecers who will absorb the investment costs. If prices remain too low, the dividends paid by the state-owned company into the coffers of the Quebec government will melt away.

“It’s either the customer or the tax system. Ultimately, that means either customers see their rates increase, or Hydro-Québec’s profit, which contributes to public services, is reduced. These are the two communicating vessels,” explains Mr. Rhéaume.

A clear plan, Fitzgibbon promises

To convince them to adhere to energy sobriety, Quebecers will have access to a detailed plan of energy needs, assures Minister Pierre Fitzgibbon.

Included in his bill, the plan will present projections of future energy demand, analyzes of the resources available to meet that demand (such as hydropower, wind, solar, etc.), as well as measurements to promote energy efficiency and the transition to more sustainable energy sources.

This plan would be reviewed every three or five years.

“In France, they did it well… and everywhere I went. This is the famous integrated resources plan. We will present that in the bill. What energy resources will we need to decarbonize in 2050?” the minister explained in an interview. This portrait will demonstrate the extent of the challenges that Quebecers will have to face in terms of energy.

End of abundance

As in France, where the nuclear fleet was seen as an inexhaustible source until the recent crisis, Quebec was bathed in abundance until very recently.

“A tasty illustration, before the crisis. In the summer of 2022, the French government had to issue a circular to remind people that it was reasonable to close the door of a commercial premises that was being air-conditioned. It says a lot about the fact that the French nourish the idea of ​​an energy abundance which was due to them because of the public energy service,” relates French energy expert Yves Marignac.

Despite this belief, the French quickly changed their habits and accepted sobriety.

In Quebec, the end of the hydroelectric surplus is brutal and the population fears sobriety. “They are right,” admits Hydro’s vice-president for energy planning, Dave Rhéaume.

“For ten or fifteen years, we didn’t do enough. We allowed a form of energy waste to materialize in Quebec.”

We must now begin a 180-degree turn, and Hydro-Québec assures that it will support the population by focusing on education.