The CEO of Hydro-Québec believes that the state-owned company must once again become an ambitious organization focused on economic development for future generations. To achieve this, Michael Sabia is banking on massive investments to build and upgrade hydroelectric structures. A larger rate increase for business customers is on the cards, while respecting François Legault’s promise to cap the increase in residential bills at 3% per year. The state-owned company promises a flood of financial incentives to accelerate energy sobriety, while turning its back on the Gentilly 2 nuclear power plant.
Here is what emerges from the CEO’s visit to parliament, where he defended his action plan by answering questions from elected officials:
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Low rates, except for business customers
Despite all the investments planned by Hydro-Québec, the state-owned company has planned annual residential rate increases of no more than 3% by 2035. Business customers will, however, experience a larger increase to compensate. “Even if we add new energy sources, with our very low-cost asset base (…) our average costs will remain ever lower,” pointed out Michael Sabia. “An increase at certain levels for business customers, yes it is very probable,” he however indicated. The Prime Minister also swore that increases in residential electricity rates would always be capped at 3% under a CAQ government. The Minister of Energy, Pierre Fitzgibbon, however, clarified that this rate will not be included in the draft bill on the regulation of clean energy in Quebec. The rate could also be modified by the Energy Authority in 2025. Thus, this measure is based solely on the word of the Prime Minister.
Bringing back economic growth
Michael Sabia is “personally” convinced that the state corporation must once again become an organization that focuses on economic growth, as it has been in the past. He reiterated Hydro-Québec’s needs: $185 billion in investments to increase its production and transmission capacity. It wants to add between 8,000 and 9,000 Megawatts by 2035. This is the “energy mix” that is proposed by the organization, including the construction and upgrading of dams, as well as the increase in wind production. “It’s necessary,” he believes, nevertheless wanting a discussion with the population. “This is a critical moment to return Hydro-Québec to a period of growth and ambition to contribute to the economic development of Quebec to decarbonize and prosper. We have to do both at the same time,” he said. “Clean energy is the engine of economic growth.” Furthermore, the only way to carry out major projects is with the participation of First Nations, pointed out the CEO.
Photo Stevens LeBlanc
Climate resilience
The CEO was clear: “the service is not up to par”. The first objective is to improve this customer service, especially in the era of climate change. Extreme events are increasingly putting a strain on the network. The year 2023 has also broken all records in terms of breakdowns. Hydro wants to double investments to reach $50 billion in the long term so that the network is more resilient. “These investments will allow us to reduce the number of breakdowns by 35% within seven to ten years,” estimates Mr. Sabia. These extreme events are also responsible for 50% of breakdowns. The presence of vegetation near installations harms the network. Burying the wires and adding composite posts will be part of the solutions. Batteries and mobile networks will also be distributed across the territory.
Financial incentives
Hydro wants to double its energy efficiency target. There is no question of using the stick to force a change in habits, explains the CEO. To achieve this, he is committed to implementing new initiatives to encourage better use of hydroelectricity. A “precious” product, he says. The organization promises to increase its financial incentives in order to convince customers to adhere to energy sobriety. It will also grant larger subsidies of 50% on the price of heat pumps. Hydro plans to improve to reach lower-income families. The organization admits it; Quebec performs poorly in terms of energy consumption. Current dynamic pricing products have limited impact, believes the CEO. For the moment, only 200,000 customers out of 4 million participate in programs to reduce their bills and reduce consumption.
No in Gentilly, but perhaps small reactors
After reflection and due to the lack of social accessibility, Hydro-Québec abandoned its study on the restart of the nuclear power plant, Gentilly 2. Last August, the new boss of Hydro-Québec Michael Sabia initiated a feasibility study on the relaunch of the Gentilly-2 nuclear power plant, inactive since 2012. An analysis was indeed carried out by the firm AtkinsRéalis, nothing more, he said. “We decided not to continue with this because of the lack of social accessibility,” said Michael Sabia. However, he said the state-owned company had an appetite for small nuclear reactors. “We are potentially interested in small modular reactors” which could be structured for certain regions, indicated Michael Sabia, ensuring that for the moment, no megawatt including nuclear power has been identified at the moment.