The richest households consume more electricity on average than others. At a time when Hydro-Québec is trying to increase its efforts in energy efficiency, the richest could be asked to pay more for their kilowatt-hours, when they exceed a certain threshold.
Historically, Hydro-Québec’s residential customers pay less than it costs the electricity producer to supply them. On the other hand, commercial customers pay more. This is called cross-subsidization.
According to data from the report onState of Energy 2024 published Thursday, industrial customers pay 105% of the costs of their consumption while commercial customers pay 133%. In comparison, residential customers pay less than 86% of the cost of the energy they consume.
Still according to the report’s data, it is the richest who benefit the most from cross-subsidization.
“The question we must ask ourselves is: is it normal for high-income households to be cross-financed by Quebec SMEs? » asked Pierre-Olivier Pineau, holder of the Chair of Energy Sector Management at HEC Montréal, during the presentation of the report on Thursday.
L’State of energy in Quebec 2024 reports that households with incomes of more than $150,000 consumed on average more than 25,000 kWh in 2022, while households earning less than $40,000 consumed only 13,000 kWh on average.
The “subsidy” for lower incomes was equivalent to $164 in 2022, while that for higher income households was equivalent to $319, according to the document.
We must ask ourselves “whether we should continue to finance all classes of consumers”, because our consumption of electrical energy “is going to increase”, underlined Pierre-Olivier Pineau.
Prices based on consumption
According to Jean-Pierre Finet, analyst in economic regulation of energy for the Regroupement des organisms Environnemental en Énergie (ROEE), we must avoid pricing based on income, but rather set up rates based on consumption. , by adding one or more tiers to the pricing.
The first 40 kilowatt hours per day of consumption are billed at around $0.07 per kilowatt hour and the rest of the kilowatt hours are billed at around $0.10.
“We could make another level from 80 kilowatt hours and more per day, for those who heat their parking lot in winter for example,” indicated Jean-Pierre Finet.
He believes that there could also be different price levels in the summer, a time of year when the need for energy drops.
“We could add another level from 41 kilowatt hours per day”, so “those who heat their swimming pool or who use air conditioning at full capacity” would be affected “by this price cap”.
However, warned the analyst, “if we do a tariff overhaul, we must also accompany this with an energy efficiency assistance program to improve the performance of buildings”.
Targeted programs for “imposing houses”?
When he presented his 2035 Action Plan to the media last November, Hydro−Québec President and CEO Michael Sabia indicated that residential customers who consume a lot of energy could have “personalized rate options » which reflect their significant consumption.
“We will go further in our efforts to raise awareness and support certain categories of customers, such as owners of large houses or poorly insulated rental buildings and businesses in sectors that consume a lot of electricity,” we can say. read in the Hydro-Québec plan.
The CEO of Hydro-Québec did not specify when presenting the plan how owners of large houses could see their rates change.
In the same press conference, vice-president Dave Rhéaume however clarified that Hydro-Québec did not intend to “prohibit, but rather to encourage good behavior”. “We can imagine sending signals” to “house owners who have a lot of non-essential equipment,” he explained.
“For example, a house where there are electric vehicles, a heated parking lot, a jacuzzi, are there ways to provide incentives so that this equipment does not have an impact on the peak? electricity demand? That’s the kind of idea we have,” Mr. Rhéaume said.
When the plan was presented last fall, the CEO of Hydro-Québec committed to ensuring that “rates remain low and affordable” and that increases do not exceed inflation or 3 % for residential customers.