Hydro-Québec CEO Sophie Brochu to exit post after three years in the job

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Hydro-Québec chief executive officer Sophie Brochu has announced she is stepping down, just weeks after the provincial government created a “super ministry” of the economy that also assumed oversight of energy matters.

Ms. Brochu, one of Canada’s best-known female business leaders, will leave on April 11, the utility said in a statement on Tuesday. When she departs, she will have served three years of a five-year term.

“After deep reflection, I feel the moment is right to pass the torch,” Ms. Brochu said in an internal message to colleagues obtained by The Globe and Mail. She gave no specific reason for her decision and did not return a call asking for further clarification.

Ms. Brochu is the first woman to lead Hydro-Québec, one of the world’s biggest producers of low-emission hydropower. Her decision comes at a pivotal time for the utility, which is grappling with booming demand from industry for its renewable energy just as the province readies a transition away from fossil fuels by increasing electrification to meet climate targets.

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After a decisive victory in the Oct. 3 provincial election, Premier François Legault named Pierre Fitzgibbon as minister for the economy, innovation, and energy – a kind of superdepartment that gives him oversight of Hydro-Québec. In the days that followed, outside observers such as Pierre-Olivier Pineau of Montreal’s HEC business school predicted tension ahead between Ms. Brochu and the government over how best to use Quebec’s hydropower resources to spur industrial development.

Quebec has long espoused a strategy of using its vast hydropower resources, the bulk of which are produced by dams in the north built decades ago, to lure investment. Today it is home to several energy-intensive industries such as aluminum production and mining that pay among the cheapest electricity rates in North America.

The Legault government is keen on expanding that strategy to lure more investment and drive growth, particularly to attract companies that want to build electric vehicle battery components and work on innovations such as green hydrogen fuel cells. Exactly how far it will push this effort, however, and at what price for power users, remains to be seen.

At the end of the year, Quebec said it would move to release Hydro-Québec from its obligation to provide crypto miners in the province with 270 megawatts of power reserved for them. Mr. Fitzgibbon said the government remained open to projects generating more significant economic benefits.

The issue is that Quebec’s power supply is already coming under pressure, and adding more industrial customers beyond existing ones could require building new hydroelectric or wind projects at a cost three or four times those of existing dams.

Mr. Legault has asked Hydro-Québec to update its studies on the viability of building new dams. The final phase of the utility’s latest new-build, hydroelectric project on the Romaine River is scheduled to come online this year. Ms. Brochu’s view is that before building any new production, Hydro-Québec has to make sure it’s as efficient as it can be with its existing system.

The CEO hinted in recent media interviews that she would resign if she found herself in a position of irreconcilable differences with the government. She has said booming demand from industry for Quebec electricity will put significant pressure on supply and that Quebec has to be properly compensated for its renewable power because it is increasing in value.

“I don’t want to become the Dollarama” of utilities, Ms. Brochu told The Globe and Mail in an interview this past fall, adding that managing booming industrial demand is key. “If we systematically offer an inexpensive industrial rate to attract everybody, that’s a disaster.”

Hydro-Québec insiders said Tuesday that Ms. Brochu has a good relationship with senior government leaders and that there was no incident or disagreement that sparked her decision. On Twitter, Mr. Fitzgibbon called her “a natural and dynamic leader” and wished her well.

By leaving now, however, Ms. Brochu will avoid some of the harder exchanges with Hydro-Québec’s political masters that are sure to come in the months ahead. To cite just one, questions are mounting over whether the province should continue the risk-sharing pacts it has with aluminum producers, which have allowed the companies to benefit from cut-rate electricity prices for decades.

“They have to prepare the population to pay differently for electricity, and probably pay more,” Mr. Pineau has said of Hydro-Québec. “That will be a problem with the government. Questions about rates and prices become very political very fast.”

Ms. Brochu might also simply have bristled at playing handmaiden to someone else’s green shift. Ms. Brochu is one of six members of Quebec’s newly formed Committee on the Economy and Energy Transition, including Mr. Legault and four other cabinet ministers.

“Brochu, who is used to being a real CEO, to really lead the office, finds herself as part of a committee with four ministers. … It certainly didn’t contribute to her staying,” said Normand Mousseau, scientific director of the Trottier Energy Institute at Polytechnique Montréal. “She’s an experienced CEO, and CEOs are people who make decisions, not just someone who transmits the decisions taken elsewhere.”

Ms. Brochu, an economist who formerly led natural gas distributor Énergir, did not seek to be Hydro-Québec’s CEO when she was approached by the government in 2020. She has said she accepted the job out of a sense of duty to help the province, then in the early throes of the COVID-19 pandemic.

“I humbly believed that I could serve Quebec, which was going through a period of turbulence,” she said in Hydro-Québec’s statement. That turbulence is now largely over and the utility is in a good position for the future, armed with a new multiyear strategic plan, she said.

The CEO delivered record earnings of $3.5-billion for Hydro-Québec last year as the utility sold an unprecedented volume of power within the province and increased exports. She also helmed the finalizing of the utility’s biggest-ever export contract, which will provide power to New York under a 25-year pact that could generate more than $20-billion in revenue for the provincial Crown corporation.

“Sophie’s contribution – marked by her human approach, strong communication skills and vast experience in the energy sector – will stand the test of time,” Hydro-Québec chairwoman Jacynthe Côté said in the statement.

No one has been named yet to replace Ms. Brochu. Hydro-Québec’s board will recommend candidates to Mr. Legault’s cabinet, which will then choose a successor.