At this point, we might as well determine electricity rates by picking random numbers from a hat.
Since the beginning of the month, Quebec consumers have been paying 3% more for their electricity than the day before. For large companies, the increase is 4.2%. Small businesses? It’s 6.5%.
Ah yes: aluminum smelters benefit from an electricity price that varies according to the price of aluminum.
Do not look for logic in this jumble of disparate measures: there is none. No more than fairness, for that matter. Today, SMEs in Quebec are screaming at injustice and they are quite right.
Put yourself in their shoes: they are the only ones to see all of the inflation reflected in their electricity bill. And this, while 59% of them are still dragging debts from the pandemic1that the labor shortage is hitting them hard and that several businesses, including restaurants, have just suffered significant losses due to power outages.
It is not a question of opposing any increase in electricity tariffs. To see how it is wasted in Quebec, we can even argue that these increases could be beneficial.
But these increases must be based on rigorous analysis. Not on political decisions that change with the weather.
Today, the only reason that large companies face a lower rate increase than SMEs is that they have greater lobbying power with the government.
Is that really how we want to manage things in Quebec?
Things were going well before the CAQ decided, against the advice of just about everyone, to fix what wasn’t broken.
It would be very funny if it were not so distressing: the CAQ bill at the origin of the current mess was called An Act to simplify the process for establishing electricity distribution rates.
The least we can say is that the government missed its mark.
Before, electricity increases were decided by an independent tribunal: the Régie de l’énergie.
Each year, Hydro-Québec applied for new electricity prices based on its revenue and expenditure projections. The Régie listened to the people affected by these increases, including both residential and industrial consumers. Then she would decide.
The process may have been cumbersome, but this cumbersomeness was the price of rigour. The system was working. And he was apolitical.
In 2019, the CAQ decided that the Régie would only poke its nose into electricity rates every five years. In the meantime, rates would be pegged to inflation. Everyone and his sister warned the government that it could go wrong, but Quebec turned a deaf ear.
It went wrong.
When post-pandemic inflation ran rampant, electricity rates followed. To calm the discontent of consumers, the government had to lay a new bill which caps – arbitrarily – the increase in tariffs at 3%.
This cap, which was originally intended to also apply to small businesses, was finally applied only to residential consumers.
Large consumers who benefit from the famous “L” rate have managed to escape all this new mechanism. It is still and always the Régie de l’énergie that sets their rates according to the good old method.
The result is a quilt of measurements that no longer has any logic or coherence.
We can see this when we see that Hydro-Québec is currently reaping record profits – a situation that would normally encourage the adoption of more modest rate increases.
Our electricity is becoming scarce and is called upon to play a crucial role in the energy transition that is beginning. Its price represents an important stake which cannot be the subject of so much casualness.
The disparate increases that came into effect this month confirm this: it is high time to take control of electricity rates away from politicians and give it back to the Régie de l’énergie.