18 September 2019
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.
Bill 34 proposes substantial changes to the way electricity distribution rates are set in Quebec. To this end, changes are being made to the Act respecting the Régie de l'énergie (hereinafter referred to as the RREA), which will have the effect of removing important powers from the Régie de l'énergie. The Hydro-Québec Act and the Act respecting municipal and private electricity systems are also being adjusted to take account of the proposed new rate-setting method.
First, sections 5 and 6 of Bill 34 remove the Régie de l'énergie's current role in setting the Distributor's electricity rates (section 6), and its obligation to hold a public hearing when doing so (section 5). Sections 1, 2, 3, 4 and 8 introduce a new method for setting electricity rates by amending the Hydro-Québec Act (sections 1 to 4), and by adding additional sections to the ERA (section 8). In short, electricity distribution rates would now be indexed to the Consumer Price Index for five years, after which the Régie would carry out the usual rate-setting exercise for one year.
Bill 34 also removes the Régie's powers to authorize major investment projects and commercial programs by the Distributor (sections 11 and 12). In addition, it removes the current opportunity for any interested person to apply for a rate change (section 6). Finally, the bill modifies the information that the Distributor must provide annually to the Régie de l'énergie (section 14), and also removes the obligation to establish regulatory incentive mechanisms for the Distributor and Hydro-Québec in its transmission activities (section 7).
These are major legislative changes, since they have an impact on the very mission of the Régie de l'énergie, which is to reconcile the public interest, consumer protection and the fair treatment of energy carriers and distributors. Bill 34 also calls into question the principles behind the creation of the organization responsible for regulating Quebec's electricity distribution monopoly.
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.
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.