Hydro-Québec will never be independent

The speech on the independence of Hydro-Quebec took an astonishing swelling in the last days.

After the announced resignation of its CEO Sophie Brochu, François Legault was accused of undermining the independence of Hydro-Québec (HQ).

The Prime Minister wants to attract foreign companies by offering our electricity at a discount even though there is a shortage. M^me Brochu, like many experts, was skeptical. This tension is not unrelated to his departure. But no matter what one thinks of Mr. Legault’s ideas, he has not crossed a red line. The government is the sole shareholder of the Crown corporation, and the final say rests with it.

I spoke to many sources who knew firsthand the special relationship between the government and Hydro-Quebec. The conclusion is unanimous: as far as Québec’s economic policy is concerned, the government corporation will never be independent.

A strong symbol of this relationship: until the early 2000s, the Prime Minister’s office was located on the premises of the state-owned company. We would not have imagined him settling on rue Parthenais at the headquarters of the Sûreté du Québec.

For operations, HQ has its management and its board of directors. The government must let them do their job. But for the major strategic orientations, Quebec has its say. It’s a question of democracy: the parties propose a plan, the citizens vote for their favorite and the government executes it.

For example, the Liberals want to create a government corporation for green hydrogen, a hyper-energy-intensive project that might not please Mr.^me Leaflet. And Quebec solidaire promises to nationalize renewable energies, under the control of the regions. We would have liked to know the level of enthusiasm of HQ…

Tension has always existed between Quebec and this “State within a State”, as HQ is nicknamed.

A recent example: in the summer of 2018, former CEO Éric Martel opposed the Apuiat wind farm, a joint venture between Boralex and the nine Innu communities. HQ did not want to buy this electricity. The price was too high, especially in a context of surplus. Pierre Moreau, then Minister of Natural Resources, had to call the CEO to order.

HQ sees itself as a Crown corporation with a commercial mandate. Its leaders receive a bonus based on their performance. The government must have a broader analysis.

In the case of Apuiat, the Liberals hoped to improve relations with the Innu, whose collaboration would be required for future projects on their territory. Mr. Moreau warned those who claimed that Quebec would remain in surplus. Predicting the energy market is risky, he said. The future proved him right. Moreover, François Legault, who criticized this project, ended up rallying to it.

The state corporation was also not thrilled when Bernard Landry developed the wind power industry. Economically, there was no consensus on the idea. But the PQ leader saw it as a way to help Gaspésie and Bas-Saint-Laurent.

Another clash, the Gentilly-2 nuclear power plant. In 2008, the Charest government postponed the decision to renovate or close it. CEO Thierry Vandal saw that the site would cost more than expected and that the price of energy was falling because of shale gas. But the Liberals dared not abandon this popular project in Mauricie, so Mr. Vandal had to spend nearly $1 billion to plan the work. It took the election of Pauline Marois to put an end to it.

HQ has an impact on regional development, the environment and First Nations. She is in constant dialogue with several ministers. To advance its interests, it chooses the interlocutor most likely to defend it in the Council of Ministers. She can also play the clock – HQ management lasts longer than a government, and an election can fix its problems. But no matter the file, when the stake is important, it is settled at the top of the pyramid.

For this reason, an observer considers the committee created by Mr. Legault awkward, where Mr.^me Brochu sat with several ministers. If there was a conflict, he had to deal with it in person, alone with her. At HQ, however, it is assured that this committee had started well.

The Prime Minister is sometimes right, sometimes wrong. But he is always within his right to be wrong.

A CEO already found?

Hydro-Québec was ready for the departure of M^me Leaflet. In the past year, the Crown corporation had begun a process to find its successor.

This is implicit in Tuesday’s press release: “In terms of succession planning, the Board of Directors of Hydro-Québec has played its role and is thus able to recommend candidates to the government”, we read there.

According to my information, the human resources committee already has one or more names.

Under the law, it is he who proposes one or more candidates. The Prime Minister then retains the person of his choice. However, it is not impossible that he promotes another candidacy.

A scenario that some seem to fear internally: a private manager with no experience in energy. This would at least explain why the Board’s recruitment process has been highlighted in this way. In addition to M.^me Brochu, the president of the board, Jacynthe Côté, will also leave in April at the end of her mandate.

On Wednesday, François Legault said he was looking for a “developer” to replace M^me Leaflet. A person who has already participated in this process tells me that sometimes the Prime Minister’s Office makes its preferences known. After all, he and HQ have an interest in their choices being compatible. They do not want to read in the media that a person proposed by HQ has been rejected by Quebec. However, these negotiations are usually done more subtly, behind the scenes.

The PQ asks that the opposition be consulted and that the decision be “apolitical”. It would be elegant, but not mandatory. After all, the CEO does not report to the National Assembly and his vision must align with that of the Prime Minister.

In the past, this process has worked quite well. During their first mandate, the caquistes chose Sophie Brochu and Jacynthe Côté, respectively as CEO and president of the board of directors (CA). The Couillard government had also approached them, but they had refused for personal reasons. This is proof that these appointments were not partisan.

Other choices were more amazing. Pierre Karl Péladeau was sent to the presidency of the CA by Pauline Marois, and Philippe Couillard had opted for Michael Penner. In both cases, they did not have any particular expertise in energy.

M^me Brochu had been chosen for her competence and Mr. Legault had a good relationship with her. He had even already tried to recruit her as a CAQ candidate.

To convince her to lead HQ, he agreed that she continue to sit on the Board of Directors of the Bank of Montreal. A privilege that she was the only head of a state-owned company to have.

The opposition had also deplored it. In parliamentary committee, Mr.^me Brochu had hinted that a man would have been treated differently. In fact, one of his predecessors, Thierry Vandal, also wanted to sit on the board of a bank, but the liberals had refused.

M^me Brochu had been upset by these criticisms, as well as by reports of alleged conflicts of interest over minor contracts awarded to a company of her spouse. She must have said to herself: do I still want to do this demanding job if it is to be attacked in the media and to defend a vision that is not entirely compatible with that of the government?

This is the narrow line on which his successor will have to walk: to enlighten the government without forgetting who remains the ultimate boss.