2023-11-03 06:07:37
Published at 2:07 a.m. Updated at 6:00 a.m.
I don’t know what feelings a bullfighter feels following poking a bull, but I have the impression that it might be similar to what a columnist might feel when he throws the words “Electricity Dollarama” at Pierre Fitzgibbon.
“I don’t like this expression,” the Minister of the Economy, Innovation and Energy tells me straight away. Make no mistake: on the phone, the tone is calm and polite. He will even be cordial later in the interview.
But obviously, these words said by the former CEO of Hydro-Québec Sophie Brochu shortly before her resignation stuck in the minister’s throat.
If I wanted to come back to the question, it is because Ms. Brochu’s successor, Michael Sabia, has just tabled a new action plan which practically redefines the word “ambitious”. To convince yourself of this, consider this: the figure of $185 billion was printed in the press release to describe the investments that might be necessary to achieve this “Action Plan 2035”.
I might be wrong, but I have the impression that such amounts have never been discussed in Quebec.
PHOTO RYAN REMIORZ, THE CANADIAN PRESS
Hydro-Québec CEO Michael Sabia at a press conference on Thursday
This money will be used to produce phenomenal quantities of electricity. Three quarters will be dedicated to decarbonizing the economy – excellent news. The other quarter will be used for “economic growth”. And it is here that the specter of the Dollarama of electricity looms.
Despite a busy day Thursday with the unveiling of the Hydro-Québec plan, Minister Pierre Fitzgibbon agreed to take part in our exercise and try to convince me that this fear was unfounded.
We have never been a Dollarama of electricity. We have to be careful how we approach the issue. Many people want to demonize the fact that companies profit from green energy at low rates.
Pierre Fitzgibbon
Businesses, in any case, seem to see us as a place to get bargains. They rush to the gate to benefit from our electricity. Demands reach 9,000 megawatts – a huge, gigantic, colossal figure. In comparison, this is 70 times the power that all electric vehicles in Montreal will require in 2030.
The demand is such that the majority of projects will have to be refused.
The companies that are lucky enough to be chosen are offered a rate (the famous L rate) which is around 5 cents per kilowatt hour, while the new electricity that we develop costs more than that to produce. And that’s without counting the subsidies and tax credits that can be added.
Are we selling off our precious electricity to manufacturers?
“We must never forget that industrial and commercial rates subsidize residential rates. It’s a bit of the opposite that’s happening,” replies the minister.
It is true that in Quebec, individuals pay less than the cost price – we call this cross-subsidization. But according to experts Pierre-Olivier Pineau and Normand Mousseau, it is more businesses than large industrialists who finance the electricity in our homes.
I ask the question once more. Does it make sense to develop new electricity and then attract companies by offering them less than what it costs? Our most recent hydroelectric complex, Romaine, produces for example at a cost of between 6 and 7 cents per kilowatt hour. This is higher than the L rate.
“Look at Hydro-Québec’s profits! These are pretty significant profits. Today, it is false to say that L pricing causes losses to someone,” replies the minister.
PHOTO JACQUES BOISSINOT, CANADIAN PRESS ARCHIVES
The Romaine complex produces electricity at a cost of between 6 and 7 cents per kilowatt hour.
That too is true. This is because the electricity from Romaine is mixed with that produced by the good old dams erected in the 1970s and which produce at a ridiculously low cost, less than 2 cents per kilowatt hour. The average cost therefore remains low.
Basically, the whole debate is whether, when a company comes to us, we should charge it the average cost of electricity (which includes that of old dams) or the cost of the new electricity that must be developed to welcome him.
Unlike the minister, expert Pierre-Olivier Pineau, from HEC Montréal, is convinced that we must choose the second option.
“Additional consumption must not be done at a price that is lower than the cost of producing this additional unit,” he summarizes.
I completely agree with him.
Pierre Fitzgibbon considers the vision “a little simplistic”.
You have to look at the whole work. What is Rio Tinto’s contribution to Saguenay? What is Ore Iron Quebec’s contribution to Sept-Îles? It is enormous ! The salaries that are paid, all the profits. So if we lose a dollar on an electricity rate, but gain two elsewhere…
Pierre Fitzgibbon
Mr. Fitzgibbon also reminds me that it is not he who sets industrial rates, but the Régie de l’énergie. However, it is he who chooses the projects.
One thing is clear, in any case: with the scale of the investments announced Thursday and the cost of new electricity, someone, somewhere, will have to foot the bill. As François Legault promised that residential consumers will “never” experience an increase of more than 3%, Pierre Fitzgibbon mentioned two options.
Either Hydro-Québec’s profits melt away, or industrialists’ bills rise.
The choice is far from trivial. Hydro-Québec’s profits are paid to the Quebec government. They are used to finance our schools, our hospitals, our social programs. If we choose to cut them to maintain advantageous rates for businesses, I see an unjustifiable transfer of money from the public to the private sector.
The minister argues that we do not have to make this choice now since the impact of the investments will only be felt in a few years.
“We are not there, there is no decision made yet. By 2025, nothing will change,” he says when I ask him regarding it.
On the contrary, it seems to me that we should start thinking regarding it seriously.
Verdict
Minister Pierre Fitzgibbon did not convince me. Yes, Hydro-Québec’s decision to devote the lion’s share (75%) of new electricity to decarbonization is reassuring. But seeing the long line of industrialists waiting to benefit from our electricity, I can’t help but think that we are selling off our electrons and that we are negotiating badly. If you have 200 buyers at your door the day you put your house up for sale, aren’t you going to conclude that your price is too low?
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#Convince #Quebec #electricity #Dollarama
