31 January 2023
Bill 2 misses its target
Option consommateurs believes that Bill 2 misses the target and fails to establish reasonable electricity rates for Quebec society as a whole. In addition, the new regulatory powers granted to the government and the discretionary powers granted to the Minister are too broad.
In December 2019, the National Assembly passed Bill 34, An Act to simplify the electricity distribution rate-setting process. Among other things, this Act amended the Hydro-Québec Act and the Act respecting the Régie de l'énergie. It removed the Régie de l'énergie's previous role in setting Hydro-Québec's annual electricity rates. It also created a new rate-setting process. From now on, the Régie de l'énergie will set rates only once every five years. In the meantime, the new electricity distribution rate-setting method provides for rates to be indexed to the Consumer Price Index. The next rate case is therefore scheduled for 2025-2026. These changes were intended to bring greater predictability to electricity rate fluctuations.
Option consommateurs and many other stakeholders opposed this major change in the way rates are set. In particular, we pointed out that tying electricity rates to the rate of inflation made them sensitive to variations in volatile components that could be far removed from the reality of the electricity market. This change also put customers at risk in the event of significant increases in inflation.
Major upheavals have occurred since the law was passed. The COVID-19 pandemic and the war in Ukraine have turned the world economy upside down; the Quebec economy has not been spared. The Consumer Price Index reached 6.9% in October 2022. Without legislative amendment, electricity rates would rise by 6.4% as of April 1, 2023.
It is against this backdrop that Bill 2 is presented. This bill again amends the Hydro-Québec Act by capping the rate of indexation of domestic rates at the upper end of the Bank of Canada's inflation-control range.
While this measure is intended to protect Quebec consumers from excessive electricity rate increases, Option consommateurs believes that Bill 2 misses the mark and fails to establish reasonable electricity rates for all Quebecers. In addition, the new regulatory powers granted to the government and the discretionary powers granted to the Minister are too broad.
See also...
The return of rate-setting by the Régie de l'Énergie (Bill 69)
Option consommateurs welcomes the return to setting rates and conditions of service based on the cost of service, and considers the three-year periodicity to be a reasonable compromise between administrative efficiency and regulatory rigor. At the same time, we strongly supports the repeal of the automatic adjustment of rates in line with the CPI.
Simplifying rate-setting does not serve Quebecers (Bill 34)
Bill 34 aims to simplify the rate-setting process. On the face of it, this objective is likely to be achieved. But does this simplification benefit consumers? We think not. We believe that Quebec households are best served by a neutral, independent body that reconciles public and private interests and sets the Distributor's rates and conditions following an objective, rigorous process.