Fri. Feb 23rd, 2024

Minister Pierre Fitzgibbon's bill would mark the end of Hydro-Québec's distribution monopoly.

Québec would legalize the sale of electricity between companies

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The Minister of Economy, Innovation and Energy, Pierre Fitzgibbon, wants the private sector to become more involved in electricity production, as TES Canada intends to do in Mauricie.

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  • Thomas Gerbet (View profile)Thomas Gerbet
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    The Legault government is preparing a small revolution, 60 years after the nationalization of electricity in Quebec. Radio-Canada has learned that it will table a bill next month that will legalize the direct sale of electricity from one private company to another, which is currently prohibited.< /p>

    After encouraging the boom in private self-production, Quebec is moving to the next stage. Wait and see what’s coming. This is only the beginning! warned the Minister of the Economy, Innovation and Energy, Pierre Fitzgibbon, last November.

    At present, only Hydro-Québec and a few municipal public networks (Hydro-Sherbrooke, Hydro-Jonquière) have the right to sell electricity on Quebec territory . This is called the distribution monopoly.

    Private companies will take the reins, fears the president of the Canadian Union of Public Employees (CUPE) for Quebec, Patrick Gloutney, who represents the majority of workers at the state company.

    The Hydro-Québec monopoly has just completely exploded.

    A quote by Patrick Gloutney, president of the Canadian Union of Public Employees for Quebec

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    At the beginning of the month, CUPE launched an advertising campaign where 16,000 union members were working on the initiative. Hydro-Québec warned against the growing role of the private sector in the electricity sector.

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    CUPE represents linemen, electricians, trade workers, office staff, technicians, etc. at Hydro-Québec.

    According to our sources, who participated in the preparations of the bill, Minister Fitzgibbon wants to modify the Energy Authority Act, in particular article 60.

    Currently, the law allows a company to produce its own electricity, but it can only use it for its own needs. It does not have the right to distribute it.

    One ​​exception is possible: electricity from forest biomass can be sold directly to a consumer, provided that it is located in a location adjacent to the production site.

    The government wants to allow all producers of renewable energy (wind, solar, small dams, etc.) to benefit from the exception granted to biomass .

    Incidentally, the term “adjacent” would be replaced by the concept of “proximity”, which would prevent private distributors from having to sell only to their immediate neighbor. It remains to be seen what the limit of the definition of proximity would be.

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    The Bécancour industrial and port park will host several factories in the battery sector.

    A government source gives the example of a park industrial, like that of Bécancour, in full development with the battery sector. A producer of wind turbines (or other green energy) installed on site or nearby could thus supply factories in the sector.

    The transport of this electricity from one company to another would be done either directly, with a private transmission network, or using the Hydro-Québec transmission network, in exchange for a fee.

    These electricity purchase contracts, currently prohibited, between a producer of renewable energy and a user are ;called, in the jargon, “power purchase agreements” (PPA).

    For PPAs, the minister has already publicly indicated on several occasions his openness to the idea of ​​allowing the conclusion of private agreements between private producers and large consumers , writes by email the office of Minister Pierre Fitzgibbon, who is currently in Davos, Switzerland, for the World Economic Forum.

    If the government chose to make legislative changes in this direction, these agreements would be supervised by the Régie and would require the support of Hydro-Québec, because they would have to use its transmission network.

    A quote from Rosalie Tremblay-Cloutier, political advisor in the office of the Minister of Economy, Innovation and Energy

    No decision has been taken on this subject, assures the minister's office, which promises to submit a bill soon.

    To the government , we insist on the fact that private electricity projects avoid using the limited resources of Hydro-Québec and [are done] without financial contribution from the government and Hydro-Québec.

    We are in a context of tightening supply and demand; we must be strategic, but also rigorous, to ensure energy security, adds the minister's office.

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    Currently, wind production is already provided by the private sector in Quebec, but on behalf of Hydro-Québec, which distributes this electricity.

    L& #x27;failure of the state company to supply electricity to all industrial projects is at the origin of the planned reform.

    Hydro-Québec announced, in November, a gigantic plan to develop electricity production to add up to 9,000 MW to its network by 2035, the equivalent of building five Romaine complexes in 12 years. But this is not enough to meet all the needs of industries.

    More than 150 companies have asked the government for access to a total of 30,000 megawatts (MW) of the public grid. Quebec was only able to distribute 956 MW to 11 companies. And there are only 500 MW left to share by 2028.

    Without the addition of private electricity production, projects risk being delayed or even canceled. This is the reason why companies like TES Canada, in Mauricie, or Rio Tinto, in Saguenay–Lac-Saint-Jean, want to produce large quantities of wind electricity themselves. p>Open in full screen mode

    Michael Sabia, CEO of Hydro-Québec (Archive photo)

    Self-production can play a role, recognizes Philippe Archambault, head of media and government affairs at Hydro-Québec.

    We must work with the government and entrepreneurs so that self-production and corporate PPA projects, if the government decides to change the law on this type of contract, are adequately analyzed and that they are carried out in the right way, for the benefit of all and without impact on prices, on supply chains and on the energy security of Quebec.

    A quote from Philippe Archambault, Head of Media and Government Affairs at Hydro-Québec caveat: As supply chains (equipment) and labor are limited, resources used for private projects (e.g., a turbine or construction labor) are no longer available for public projects. A great deal of collaboration is therefore required.

    According to the holder of the Chair of Energy Sector Management at HEC Montreal, Pierre-Olivier Pineau, it is a good thing that the private sector is making these investments.

    If certain people want to overconsume, let them overconsume, but at their own expense. Let them find an electricity supplier who sells them electricity according to the terms that the market dictates.

    A quote from Pierre-Olivier Pineau, holder of the Chair of Energy Sector Management at HEC Montreal

    According to Professor Pineau, there is no justification for preventing an electricity producer from reselling to someone else, in the current state of the energy situation in Quebec. He thinks that this will not at all prevent Hydro-Québec from providing low-cost electricity to Quebecers.

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    Left: Pierre-Olivier Pineau, holder of the Chair of Energy Sector Management at HEC Montréal. Right: Patrick Bonin, head of the Climate-Energy campaign for Greenpeace Canada.

    Head of the Climate-Energy campaign for Greenpeace Canada, Patrick Bonin , thinks on the contrary that these changes would be unacceptable, because it is a public good, this electricity: This government was not elected with the mandate to dismantle the legacy of René Lévesque. p>

    What we risk seeing is literally the same; energy anarchy, with projects almost everywhere, which will spread according to the needs of companies.

    A quote from Patrick Bonin, head of the Climate-Energy campaign for Greenpeace Canada

    Even if the projects should be submitted to the examination of the Bureau d'audiences publique sur l'environnement (BAPE), Mr. Bonin fears that these companies will appropriate the best wind farm sites and regrets that ;there has been no public debate on this subject.

    Another concern from Greenpeace: An upward pressure on the prices of all other [consumers], because these companies will evade the maintenance and development of the Hydro-Québec network, which we need to make the transition energy.

    This fear is shared by Jean-François Blain, independent energy regulation analyst. With industrialists buying electricity outside the public network, Hydro-Québec would have to recover its costs from falling sales volumes, which would inevitably result in higher prices since the cost burden […] ] would be borne by the rest of the clients.

    According to our information, the bill should also facilitate the sale of surplus from private producers to Hydro-Québec. This is currently possible, in certain circumstances, with the approval of the Régie de l'energy. For example, Rio Tinto, which owns dams, has already sold electricity to Hydro-Québec. On Wednesday, Quebec announced that Resolute Forestry Products, which also has its dams, would sell some to the state company.

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    Hydro-Québec wants to build 5,000 kilometers of additional transmission lines by 2035.

    The Hydro-Québec network is already very busy and the challenge of transporting this electricity between private entities is not to be taken lightly in the coming reform.

    Some renewable energy manufacturers are pushing for privately produced electricity to be able to cross Quebec and even across borders to be sold. For them, it would be more profitable to pay a right of way than to have to build their own private transport network.

    This fee to use the transport network public transport, inspired by what is done in Europe, is called in the industry a “postage stamp”.

    Could a wind or solar farm in Sept-Îles sign a direct purchase contract with an industrial customer in Rouyn-Noranda? We do not seem to have reached this point in the government, since, according to our sources, it is the principle of proximity between producer and buyer which is favored.

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    René Lévesque, then Minister of Natural Resources, explains the advantages of the nationalization of electricity proposed by the Liberals during the electoral campaign from 1962.

    In 1962, René Lévesque, then Minister of Natural Resources in the Liberal government of Jean Lesage, gave a landmark speech on the occasion of National Electricity Week. The archives of the Hydro-Québec website remind us that, in front of the leaders of private electricity companies, he described the situation in Quebec as an incredible and costly mess.

    He denounced in particular the tangle of responsibilities of private distributors, electricity cooperatives, municipal networks and self-producers.

    René Lévesque concluded that Hydro-Québec should be entrusted with responsibility for the orderly development of hydraulic resources and the standardization of electricity rates throughout the Quebec.

    Last year, the state corporation's revenues allowed it to pay a dividend of 3.4 billion dollars to the Quebec government, the highest in its history, which contributes to the socio-economic development of the province.

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