The government decided in 2019 to set electricity rates in line with inflation, needless to say this decision was a mistake given the high inflation we are currently experiencing and the pressure this is putting on Quebecers' wallets.
Minister Fitzgibbon recently tried to put things right by introducing Bill 2, which would cap domestic rate indexation and give Quebec households a break. Unfortunately, this solution misses the mark.
In the past, rates and conditions of service were set annually by an independent tribunal, the Régie de l'énergie. However, in 2019, despite warnings from experts, the Quebec government amended the law in an attempt to simplify the calculation of electricity rates by indexing them to the rate of inflation instead. The Régie now has the power to set rates only every five years.
Despite the correction proposed in Bill 2, Hydro-Québec's rates remain sensitive to variations in external economic factors that have nothing to do with the revenues required by the Crown corporation to distribute electricity. What's more, contrary to what the government had pledged before the provincial election, businesses are no longer protected, and will see their rates rise by 6.4% as of April1. This rate shock, or at least part of it, will be passed on to consumers, weakening small businesses.
Since Hydro-Québec's rates have been indexed to inflation, the utility has been posting record profits. Even before inflation got out of hand! This shows that indexing rates in this way enables Hydro-Québec to reap revenues far in excess of what it needs to distribute electricity.
Some would argue that, since these profits fatten the state coffers, all Quebecers benefit. However, this increase is taking place in a difficult context for citizens and entrepreneurs alike. In our opinion, this situation is tantamount to imposing a tax on an essential service.
The remedy proposed by Bill 2 only serves to hide the real problem, which is that there is no match between the rate of inflation and the indexation of revenues required by Hydro-Québec. The only way to ensure that rates are fair, both for Hydro-Québec and for all electricity consumers, is for rates to be set according to Hydro-Québec's real needs. And to do this, these needs simply have to be assessed in annual rate cases before the Régie de l'énergie.
Parliamentarians have a unique opportunity with Bill 2 to protect customers from the inflationary shock and solve the problem once and for all. This way, all electricity consumers won't have the impression that the rate they pay for their electricity is just another tax in disguise, in the midst of an inflationary crisis.
*Signatories:
Christian Corbeil, General Manager, Option consommateurs
François Vincent, Vice-President, Quebec, Canadian Federation of Independent Business (CFIB)
Laurence Marget, General Manager, Coalition des associations de consommateurs du Québec (CACQ)
Jean-Pierre Finet, spokesman for the Regroupement des organismes environnementaux en énergie (ROEÉ)
Geneviève Morand, Acting Director, Union des consommateurs
Émilie Laurin-Dansereau, Budget Advisor, ACEF du Nord
Jocelyn B. Allard, President, Association québécoise des consommateurs industriels d'électricité (AQCIE)
André Bélanger, General Manager, Fondation Rivières
Dimitri Fraeys, Vice-President, Conseil de la transformation alimentaire du Québec (CTAQ)
