Hydro 4.3% rate increase shows Quebec wealth disparity

Hydro-Québec’s 4.3 per cent rate hike announced yesterday may be a big jump, but one economist says Quebecers pay far less for power than they think.

Economist says low Hydro rates benefit high-income earners the most under current structure

Hydro-Québec is raising electricity rates for Quebecers by 4.3 per cent on April 1, 2014. (Jacques Boissinot/CP)

Hydro-Québec’s 4.3 per cent rate hike announced yesterday will hit everyone hard, according to housing rights advocacy group FRAPRU.

“It’s big,” said Véronique Laflamme, the organization’s spokeswoman, of the rate announced by the province's energy board on Thursday.

She said the rate increase would mean most low- and middle-income households would be paying about $100 more a year on their Hydro bills.

She called the increase a “political comment,” adding that a significant portion of the increase is to pay for the government’s investment in wind power.

In Quebec, the electricity price is so low that people spend about the same amount of money for alcohol and tobacco as for electricity.- Pierre-Olivier Pineau, energy policy expert

Pierre-Olivier Pineau, an economist and expert in energy policy at HEC's department of management sciences, told Daybreak host Mike Finnerty on Friday that the 4.3 per cent hike is in fact a political decision, but one made long ago.

He said that most Quebecers don’t realize how much hydroelectricity actually costs.

“It is a large increase. The truth for the majority of users is that they won’t really see the increase on their bill because we have to realize that in Quebec the electricity price is so low that people spend about the same amount of money for alcohol and tobacco as for electricity,” he said.

Pineau said Quebecers chose to pay higher taxes in exchange for things like low Hydro tariffs and affordable daycare.

That’s something Coalition Avenir Québec leader François Legault said he wants to rein in if elected to power.

“What we want to propose is a charter of taxpayers, and in this charter we will have a ceiling for the inflation in all increase in tariffs,” Legault said Friday.

Low Hydro rates benefit wealthy: Pineau

Pineau said that the government may not have chosen the best approach when it chose to set low hydroelectricity rates for consumers in exchange for higher taxes.

“We decided to share electricity, but that kind of allocation of electricity benefits the richest because they have the biggest houses. If we were making people pay the price — the real value of the hydro power — it would be much easier to actually spread the value of the hydro power among everyone more equally [afterwards],” he said.

Pineau said allowing higher-income households to benefit from low rates, when they consume three times the electricity as lower-income households, does nothing but dole out breaks to wealthy people.

He added that a program already exists to help low-income people who can’t pay their bills, but said there should be more assistance for people in this income group.

Hydro-Québec had originally requested a 5.8 per cent increase, but the energy board decided that was too high.