Montreal

'Populist' bill to freeze Hydro rates will discourage Quebecers from cutting energy use, says critic

Environmental lawyer Franklin Gertler says Hydro-Québec "didn't spend the money they were supposed to on energy efficiency measures," and freezing rates now will simply act as a disincentive to reduce energy consumption.

Bill 34, tabled Wednesday, will see $1.5B returned to Hydro-Québec clients through 5-year rate increase cap

'When you reduce the increase in rates, you actually make it more difficult to do energy efficiency,' said Franklin Gertler, a lawyer representing a coalition of environmental groups. (Radio-Canada)

An environmental lawyer in Quebec says a provincial bill tabled Wednesday that will make Hydro-Québec compensate consumers for having overcharged them for electricity is a step in the wrong direction.

Quebec's auditor general concluded last year that the provincially owned utility had taken in $1.5 billion more than it had been authorized to by Quebec's energy regulator, the Régie de l'énergie. In opposition at the time, Coalition Avenir Québec Leader François Legault called that "a disguised tax."

Bill 34 is the CAQ government's response to that overbilling: it will require Hydro-Québec to freeze its rates for 2020 and limit rate increases to the rate of inflation for the following four years.

But Franklin Gertler, a lawyer representing a coalition of environmental groups focused on energy use, ROÉE, says Hydro-Québec had such high earnings in recent years "due to the fact that they didn't spend the money they were supposed to on energy efficiency measures."

He said freezing Hydro rates now will simply act as a disincentive to Hydro's customers to reduce their energy consumption.

"This would be a great time to spend this money on energy efficiency, reducing consumption of energy and great changes to our infrastructure," said Gertler.

Family of 4 to save $215 over 5 years

Instead, under the terms of Bill 34, Hydro customers, including commercial and big industry clients, will get back about $500 million through the 2020 rate freeze and save another billion dollars over the following five years by limiting electricity rate increases to the rate of inflation.

"It's obviously populist," said Gertler. "The government is trying to say, 'We're giving people back their money' — which may or may not be true."

Quebec's energy minister, Jonatan Julien, said those measures offer Hydro customers predictability and stability.

Here is the breakdown of the $500 million reimbursement, by consumer type:

  • $250 million will go to residential consumers.

  • $190 million will go to commercial, institutional and small industry consumers.

  • $60 million will go to big industry consumers.

For the average four-person household, savings on the annual Hydro bill will amount to about $60 in 2020, or about $215 in total over the next five years.

Under Bill 34, Hydro-Québec will have to ask the provincial energy board to set the rates every five years.

Gertler thinks having rates examined only on a five-year basis is "pretty well laughable."

"I don't think Quebecers should have to settle for a kind of improvised and cut-rate version of public regulation of this monopoly," he said.

'Banana Republic approach,' lawyer says

The bill will also enable Hydro-Québec to pursue infrastructure projects, reorganize distribution networks and develop commercial programs without having to seek the provincial energy board's authorization.

That also worries Gertler, who monitors energy board decisions as part of his role with ROÉE, the environmental coalition.

He says there's a risk increased autonomy for Hydro takes away from the checks and balances provided by the province's energy regulator.

"We're completing a process by which Hydro-Québec gets itself out of being publicly regulated and back into a situation where energy policy and rates are going to be set between cabinet and the public corporation without any proper public oversight," he said

"It's kind of returning to a 'hewers of wood and carriers of water,' kind of Banana Republic approach with no civil society involvement in making the important decisions."

Hydro-Québec 'extremely satisfied'

Hydro-Québec's vice-president of communications, Élise Proulx, said the corporation is "extremely satisfied" with the government's announcement.

The bill's measures mean Hydro-Québec will "have to manage its risk even more," Proulx said.

"It will be up to us to manage efficiently so that our costs are less than our revenues and to generate a net benefit for our shareholder, the government of Quebec."

The one-year rate freeze should not stop the corporation from investing, Proulx said.

But she did say that extreme weather events could have an impact on the budget.

"We will make sure that we have enough money put aside to alleviate climate hazards."

With files from Radio-Canada

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