Has the Legault government’s energy policy become a new saga after those of the Quebec tramway and the third link? Bill 69, recently tabled in the National Assembly of Quebec, raises many questions. It aims to support Quebec’s ambitious energy transition program. It will allow Hydro-Québec (HQ) to carry out its 2035 Action Plan to increase low-carbon energy production to gargantuan levels.
The state-owned company will need an additional 150 to 200 TWh by 2050, twice as much electricity as it currently has, and 60 TWh more by 2035, which corresponds to the addition of between 8,000 and 9,000 MW of power. HQ will focus on wind and hydroelectric production, but other production methods will also be considered, such as solar and battery storage.
The investments needed by 2035 are enormous, in the order of $155 to $185 billion, of which 75% will be devoted to decarbonizing Quebec, and 25% to economic growth. Of these objectives, it is estimated that 40% will be devoted to the electrification of transportation and 35% to the decarbonization of industries.
It is therefore clear that these investments are not aimed at meeting the increase in demand for energy consumption, but rather at meeting environmental objectives, the decarbonization of our economy. We see that this plan is expensive, even very expensive, and that it is the taxpayers who will pay the price.
Rates
Given the amounts involved, several specialists, associations and players in the energy industry expressed reservations in parliamentary committee about Hydro-Québec’s ability to maintain competitive rates in the future and the need to maintain the cross-subsidization that currently benefits residential customers. These new investments no longer guarantee electricity production costs as low as before. Organizations such as the Trottier Energy Institute and the Union des consommateurs point out that it is impossible to double Hydro’s production capacity without increasing residential bills.
However, despite all the experts’ considerations, the Premier of Quebec is promising to cap the annual increase in residential rates at 3%. Without explaining the basis for his remarks, he is betting that businesses will increasingly seek out clean energy and that by paying more for it, they will subsidize residential rebates even more.
In order to ensure that the rate increase is capped at 3%, he is proposing to create a residential customer assistance fund to compensate for the revenue losses caused by the cap for the Crown corporation. While Hydro has always paid generous dividends to the government, we would find ourselves in the opposite situation, where the government will subsidize the Crown corporation with taxpayers’ taxes in order to keep residential rates below 3% and finance the government’s decarbonization plan.
Perhaps we are at a crossroads. The Legault government’s decarbonization plan involves major investments that compromise our achievements in energy policies of recent years, including maintaining competitive rates for businesses and the residential market.
Autonomy
Also, the use of centralized electricity production systems such as these huge hydroelectric dams that we have built in the past may no longer be the only preferred solution for providing electricity in the current context. We see that new advanced technologies, such as passive solar, solar photovoltaic, residential wind turbines, micro-electricity, and of course energy-saving systems, increasingly make it possible to decentralize production close to homes and businesses, and thus ensure their energy autonomy at increasingly competitive costs.
In order to circumvent tariff shocks and avoid subsidizing pricing through taxpayers’ taxes, the government could invest in self-production of energy by households and businesses rather than in an aid fund that would subsidize pricing from a centralized system. Self-production is not privatization since electricity would be produced for consumers’ own needs, not for marketing.
This proposal would have the objectives of making consumers independent of a state monopoly; of making consumers responsible for their energy consumption by avoiding waste induced by pricing that is not representative of real production costs; of reducing the investments planned by the government in its current plan, thus reducing the tariff impact for Hydro-Québec customers.
Bill 69 already opens the way to this type of production for businesses, but the government could go further and provide more attractive incentives in order to increase the autonomy of households.