As temperatures dipped to as low as -40 C in Quebec last week, news that its government could be poised to end Hydro-Québec’s monopoly on power distribution ignited a heated debate about the future of the province’s prized energy giant.
Since Quebec nationalized its hydroelectric industry in the 1960s, Hydro-Québec has been a symbol of economic nationalism and collective pride among the province’s francophone majority, thanks to its prowess as one of the world’s largest and most profitable such producers.
Still, Hydro-Québec’s own capacity has not kept pace with demand. The provincial government has turned down dozens of requests from industrial customers for additional blocks of power, forcing businesses to mothball expansion plans or go elsewhere.
And the gap between supply and demand is projected to widen in coming years, as Quebec embarks on an ambitious plan to decarbonize its economy by 2050. Like it not, private producers are destined to become increasingly critical players in the province.
Radio-Canada reported last week that Premier François Legault’s Coalition Avenir Québec government plans to table legislation soon that would allow private wind, solar and small hydro-power producers to sell their electricity directly to industrial customers. Currently, the private producers can sell only to Hydro-Québec.
The move would constitute a revolution in the way power projects are planned, built and operated in Quebec. But critics warn it could be a first step toward Hydro-Québec’s privatization and a diversion of the profits from the public to the private sector.
In November, Hydro-Québec chief executive officer Michael Sabia tabled a blueprint for the future that included plans to add up to 9,000 megawatts of additional capacity by 2035, an increase of about 25 per cent. Including upgrades to existing hydro stations and new transmission lines, the cost of Mr. Sabia’s “action plan” is estimated at between $155-billion and $185-billion.
But doubts about Hydro-Québec’s ability to execute its strategy, as well as the possibility that their requests for power will be turned down, has some industrial users preparing to develop their own power projects or turn to private producers to meet their needs.
Rio Tinto, for instance, is negotiating with Innu leaders to build a 1,000 MW wind project to supply its aluminum smelters in the Saguenay region with additional electricity, after its request for extra power from Hydro-Québec was denied. TES Canada is also planning to build its own wind and solar power projects to supply electricity for a proposed hydrogen facility near Shawinigan.
“We need to be flexible,” countered Pierre Fitzgibbon, Quebec’s Economy, Innovation and Energy Minister, in a Monday radio interview on Radio-Canada. “We must encourage additional production because we’re short of energy.”
Mr. Fitzgibbon insisted private producers would not be allowed to use the utility’s transmission lines to transport power to industrial customers. But critics were skeptical of his assurances. The government faces intense pressure from energy-starved businesses to allow private operators to gain access to the utility’s lines.
“Hydro-Québec cannot at the same time have a monopoly on electricity distribution and the right to refuse to supply current or potential customers. Alternative solutions must be allowed,” said Jocelyn Allard, the president of the Association québécoise des consommateurs industriels d’électricité, in a Radio-Canada interview.
Private electricity production already exists in Quebec. Big industrial users such Rio Tinto and Resolute Forest Products produce their own power at hydroelectric stations that were exempted from nationalization. Since the 1980s, the government has allowed private operators to build and own small hydroelectric stations with a capacity of less than 50 MW. And almost all 4,000 MW in wind power capacity in the province is privately owned.
That does not sit well with environmentalists and the main union representing Hydro-Québec employees, which have lined up against all private electricity production.
The Canadian Union of Public Employees, which represents 16,000 Hydro-Québec employees, recently launched an advertising campaign on Quebec television that warns the utility’s future – and that of all Quebeckers – is under threat by the Legault government.
Hydro-Québec is “a fundamental lever of socioeconomic development,” said Patrick Gloutney, the president of CUPE’s Quebec wing, last week. “The opportunity cost of allowing private firms to take control of business opportunities using our national resources is enormous, and it would be irresponsible to let the current government pursue economic and political choices that would benefit only a minority of people to the detriment of millions of others.”
Greenpeace’s Patrick Bonin predicted that any move to end Hydro-Québec’s monopoly on distribution would lead to “energy anarchy” and charged that the Legault government was “not elected with a mandate to dismantle the legacy of René Lévesque.” Mr. Lévesque presided over the nationalization as the province’s Liberal natural resources minister in 1962, before breaking with the federalist party to form the separatist Parti Québécois.
Interim Liberal leader Marc Tanguay invoked the names of former Liberal premiers Jean Lesage and Robert Bourassa to accuse Mr. Legault of compromising Quebec’s energy heritage.
“Hydro-Québec belongs to all Quebeckers, and we must ensure that the Crown corporation remains an extraordinary economic tool that makes us proud,” he said.
Expect more sparks to fly before Mr. Fitzgibbon’s bill sees the light of day.