The government decided in 2019 to set electricity tariffs according to inflation. Needless to say, this decision was a mistake because of the high inflation we are currently experiencing and the pressure it puts on the wallets of Quebecers.
Minister Pierre Fitzgibbon recently tried to correct the situation by tabling Bill 2, which would have the effect of capping the indexation of domestic rates and allowing Quebec households to breathe a little. Unfortunately, this solution misses its target.
In fact, rates and service conditions were previously set annually by an independent tribunal, the Régie de l’énergie. However, in 2019, despite the warnings of experts, the Quebec government amended the law to try to simplify the calculation of electricity rates by indexing them instead to the rate of inflation. The Régie now only has the power to set rates every five years.
Despite the correction proposed in Bill 2, Hydro-Québec’s rates remain sensitive to variations in external economic factors that have nothing to do with the revenue needed by the government corporation to distribute electricity. . In addition, contrary to what the government had promised before the provincial elections, businesses are no longer protected and they will see their rates increase by 6.4% as of the 1er next April. Thus, this price shock, at least a part, will be passed on to consumers and will weaken small businesses.
Since Hydro-Québec’s rates have been indexed to inflation, the Crown corporation has recorded record profits. And this, even before inflation took off! This demonstrates that this mode of rate indexing allows Hydro-Québec to collect revenues that are well above what it needs to distribute electricity.
Some will say that, since these benefits fatten the coffers of the State, all Quebecers benefit from them. However, it is in a difficult context for both citizens and entrepreneurs that this increase occurs. In our opinion, this situation amounts to imposing a tax on an essential service.
The remedy proposed by tabled Bill 2 in fact only hides the real problem, which is that there is no match between the inflation rate and the indexation of income required by Hydro-Québec. . The only way to ensure that rates are fair, both for Hydro-Québec and for all electricity consumers, is for rates to be set based on Hydro-Québec’s real needs. And for that, these needs simply have to be assessed in the context of annual rate cases before the Régie de l’énergie.
Parliamentarians have a unique opportunity to seize with Bill 2 to protect customers from the inflationary shock and settle the problem definitively. Thus, all electricity consumers will not have the impression that the price they pay for their electricity is in fact only a new tax in disguise, and this, in the midst of an inflationary crisis.
* Co-signatories: François Vincent, Vice-President, Quebec, Canadian Federation of Independent Business (CFIB); Laurence Marget, Executive Director, Coalition of Consumer Associations of Quebec (CACQ); Jean-Pierre Finet, spokesperson for the Association of Environmental Energy Organizations (ROEE); Geneviève Morand, Acting Director, Union des consommateurs; Émilie Laurin-Dansereau, Budget Advisor, ACEF du Nord; Jocelyn B. Allard, President, Quebec Association of Industrial Electricity Consumers (AQCIE); André Bélanger, Executive Director, Rivières Foundation; Dimitri Fraeys, Vice-President, Quebec Food Processing Council (CTAQ)