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Consumer groups blast Hydro bid for rate hike

Surplus energy, including electricity generated by new wind farms, is a factor in Hydro-Québec’s bid for a 1.7-per-cent hike in rates for 2012, Quebec’s regulatory board heard Friday.

But most of the proposed increase – 1.1 per cent – is related to a change in accounting standards, a move to International Financial Reporting Standards, the president of Hydro-Québec Distribution told the Régie de l’énergie.

In 2012, 16 new energy projects are slated to be added to the domestic supply, president Isabelle Courville told the board.

They include wind farms, small dam projects and cogeneration biomass projects. Energy from those new ventures – mandated by the provincial government – will cost Hydro-Québec Distribution $132 million, the board heard.

“We can’t say that all the energy from the new wind farms (and other new sources) is excess. We need some of it but we have some excess,” Courville said in an interview.

There is a energy surplus of 6.5 terawatt hours in a system of 171 TWh, she said.

As a consequence of the energy surplus, Hydro-Québec has mothballed the Trans-Canada Energy natural-gas powered facility at Bécancour.

Complicating Hydro-Québec Distribution’s proposed rate hike are two other cases before the board related to the utility’s quest to boost its return on investment and extend the amortization period on certain assets.

Depending on those rulings, Hydro-Québec’s rate increase request could drop, falling within the range of 0.8 per cent to 1.6 per cent.

A coalition of consumer groups has denounced the bid for a 1.7-per-cent hike, noting, among other things, that the provincial government has already announced that rate increases are slated for 2014.

In March 2010, Finance Minister Raymond Bachand announced that rates will climb as Quebec nudges up the price of its “heritage pool” of hydroelectric over five years in a bid to bring down provincial debt.

(The rate of “heritagepool” electricity – a vast block of power linked to the low-cost generating stations in James Bay built before 2000 – 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.)

As a consequence of Bachand’s measure, the utility’s customers will see a rate increase of 3.7 per cent a year, beginning in 2014.

Those anticipated rate hikes, along with the current bid to increase the cost to consumers, is a “transfer of the debt burden that we consider unfair,” said Richard Dagenais, economist with the Coalition des associations de consommateurs du Québec.

Should the Régie authorize the rate hike of 1.7 per cent in 2012, that will translate into a jump in electricity rates of 20.1 per cent since 2004, he said.

In that time, the Consumer Price Index in Quebec will have increased by 17.5 per cent.