QUEBEC – The increase in Hydro-Québec rates, set to begin in 2014, will be sliced by two-thirds and the utility will soon cut 2,000 jobs to help improve its bottom line, Finance Minister Nicolas Marceau said Tuesday.
In 2010, the Liberal government announced that Hydro-Québec rates would climb as of 2014, as Quebec nudged up the price of its low-cost “heritage pool” of hydroelectric power over a five-year period.
That proposed increase amounted to one cent per kilowatt-hour or $408 a year in the electricity bill for an average-size house, Marceau said.
“I am announcing that the increase of one cent per kilowatt-hour over five years in the price of heritage electricity is being abolished and will be replaced by indexation to the cost of living,” he told the National Assembly.
The rate increase over five years will be one-third of what the Liberal government proposed in a budget speech in 2010.
The difference between the PQ and Liberal proposals will translate into a savings of $288 annually for an average house and $72 annually for an apartment, according to budget documents.
The specific increase announced by Marceau applies to Quebec’s “heritage pool” of electricity, a vast block of 165 terawatts from low-cost generating stations in James Bay built before the year 2000.
That rate, 2.79 cents per kilowatt hour, has been frozen since the pool was established with the notion that all citizens should benefit from living in a province rich with hydro power.
Power from Hydro-Québec developments built since 2000 costs more and is priced at about eight cents per kilowatt-hour. Consumers pay a blend of the two prices.
Marceau’s rate increase represents another broken campaign pledge by the PQ, former Liberal finance minister Raymond Bachand told reporters.
“They are reneging on their promise to freeze the rate for the heritage pool,” Bachand said.
The increase announced by Marceau does not rule out annual rate hikes for electricity from the other pool of power, a point made by Coalition Avenir Québec leader François Legault.
Hydro-Quebéc proposes those rate hikes, which are then considered by Quebec’s energy board, which may or may not approve them.
All of which leads to the possibility that there will be two rate hike increases in one year for Hydro-Québec customers, Legault said.
That’s “something that was never discussed during the (PQ’s) election campaign,” Legault told reporters.
Under the PQ, the annual increase for electricity from the heritage pool – which represents almost 95 per cent of the electricity consumed in Quebec – will be pegged to the Quebec consumer price index.
The average residential rate in Quebec will remain the lowest in North America while the business rate will be below the Canadian average, budget documents say.
Hydro-Québec has also been told to cut 2,000 of its 22,500 jobs through attrition in 2013. The cut will not affect consumer services, Marceau said.
Legault, who had called for 4,000 jobs to be sliced from the utility’s payroll, said he expected “a thank-you” note from PQ leader Pauline Marois for the idea.
Hydro-Québec, and sister government corporations Loto-Québec and the Société des alcools du Québec , will now be subject to performance audits by the Auditor General, Marceau said.
Revenue from the rate increase announced Tuesday will go into the Generations Fund to reduce the debt burden of future generations of Quebecers, Marceau said.
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