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A Hydro Quebec worker walks back to his truck after inspecting a substation in Delson, Quebec, on Oct. 12, 2022.Christinne Muschi/The Globe and Mail

The Quebec government is creating a super-ministry of the economy that will assume oversight over energy matters, setting up a potential clash with the senior leadership of power giant Hydro-Québec over how best to use the province’s immense hydropower resources in the months ahead.

After a crushing victory in the Oct. 3 provincial election, Premier François Legault unveiled his new cabinet Thursday and named Pierre Fitzgibbon minister for the economy and innovation. The former head of investment banking at National Bank Financial held the same job in the previous government but now adds energy to his economic development responsibilities, which previously fell under the purview of a department known as Energy and Natural Resources. He also becomes minister responsible for Montreal.

The change means that Mr. Fitzgibbon is in charge of Hydro-Québec. And the concern among energy experts and Indigenous groups alike is that a minister focused on bringing investment into the province and creating jobs might be overzealous in giving companies deals on electricity while Quebec’s decarbonization effort takes a back seat. Decarbonization will require massive amounts of power for things like electric vehicles and heating buildings.

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Making energy the responsibility of a minister with a big profile has advantages, said Johanne Whitmore, an energy researcher at Montreal’s HEC business school. But one danger is that he approaches the job with a much more narrow field of vision.

“What Hydro-Québec and other people that I work with fear is that the scope is going to be much, much more narrow and it’s not necessarily going to be transforming the energy system of Quebec,” Ms. Whitmore said.

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 like green hydrogen fuel cells. Exactly how far it will push this effort, however, and at what price for power users, remains to be seen. Hydro-Québec officials said earlier this year they were working with the Legault government on new guidelines to prioritize the most promising projects.

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. The utility’s legacy dams produce power for roughly three cents a kilowatt-hour.

Mr. Legault said during the election campaign that he would ask Hydro-Québec to update its studies on the viability of building new dams. The final phase of the utility’s latest new-build, hydro-electric project on the Romaine River is scheduled to come online this year.

Hydro-Québec chief executive Sophie Brochu, who was appointed in early 2020 by Mr. Legault to head the provincial Crown corporation for a five-year mandate, has already hinted in recent media interviews that she would step down if she found herself in a position of irreconcilable differences with the government. In an interview with The Globe and Mail last week, she 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 said. “Let’s say an industrial company in Quebec develops a new technology and they’re able to mount a demonstration project out of it and that it creates new jobs and that it’s extraordinary. If the government decides to give them a discount on power, that’s not dumb. But if we systematically offer an inexpensive industrial rate to attract everybody, that’s a disaster because that puts undue pressure on the rates paid by all the others.”

In a speech Monday after the ministers were sworn in, Mr. Legault said he spoke with Ms. Brochu in recent days and said they shared the same objective, namely that Hydro-Québec evolves “for the benefit of all Quebeckers.” He said he would create a new committee on the economy and energy transition that he would chair and that would include Ms. Brochu.

Hydro-Québec is weighing requests for its power from promoters of about 50 industrial projects totalling 15,000 megawatts (MW), the equivalent of roughly 40 per cent of its entire installed capacity. Already, there have been tense discussions between Mr. Fitzgibbon and Ms. Brochu this past spring over the process for approving big industrial projects, La Presse reported.

The utility predicts an end to its electricity surpluses by 2026 and that Quebec will need more than 100 terawatt hours (TWh) of additional power – more than half of its current annual generating capacity – if it wants to achieve carbon neutrality by 2050. To deal with that situation, one of the priority solutions laid out in its five-year strategic plan is stepping up energy efficiency for its residential and business customers. It also wants to refurbish its existing hydroelectric stations to generate more power and develop more wind-power projects.

Chief Ghislain Picard of the Assembly of First Nations Quebec-Labrador said the creation of a super-ministry of the economy is “very bad news for First Nations” and that they have nothing to gain from such a structure. Relations with the Legault government have been particularly difficult, the AFNQL said in a statement, adding that to be heard, the group has chosen to directly contact companies and civil society organizations that want to build business relationships with its First Nations communities.