Pity Pauline Marois. Her government has been making good on its promise to balance the books. Yet the business community, still unsettled by higher personal income taxes, a new mining regime and proposed changes to the language law, won’t give the Quebec Premier any credit for it, as she recently lamented in front of the Conseil du Patronat du Québec lobby group.
All the while, the left-wing Québec Solidaire party has been ferociously criticizing Ms. Marois and her government’s austerity measures. Listening to its articulate leaders, you could believe that Ms. Marois is a reincarnation of Margaret Thatcher. Attacked left and right, Ms. Marois’ popularity has been sinking to depths rarely seen for an eight-month-old government. Two polls recently conducted by Crop and Léger Marketing indicate that under Philippe Couillard’s new leadership, the Quebec Liberal Party is now well ahead of the Parti Québécois – despite the Liberals’ power-worn brand.
This explains why the PQ has shifted gears into good news mode, in the hopes of seducing its disillusioned supporters. In the past month, ministers have unveiled plans for a new hospital in the Charlevoix region and a number of hospital renovations and extensions across Quebec at an election-campaign pace.
Good news is no news, as some journalists say cynically. But with the new 800 megawatts of wind mill projects that Ms. Marois unveiled Friday in the Gaspé region, good news is bad news. That is, unless you happen to work for or own shares in one of the companies that manufacture wind turbines and parts in Quebec such as General Electric.
That clean power had been promised by former premier Jean Charest under an energy policy put forward in 2006, after the Liberals killed Hydro-Québec’s project for a new thermal plant in Beauharnois following massive protests over greenhouse gas emissions. In order to green Quebec’s energy production and the Liberals’ image, Mr. Charest promised that a 10th of the province’s electricity would come from wind power. This meant that Hydro-Québec would end up buying 4,000 MW of wind-powered electricity.
Only 700 MW of that electricity has still not been allocated, and many thought that the PQ wouldn’t go ahead with the Liberals’ original plan. There was good reason to think so.
Hydro-Québec is swimming in electricity surpluses. Just how big these surpluses are and how long this situation will last is a heated debate. The state-owned utility foresees surpluses until 2020, but some analysts expect they will last until 2027.
Hydro-Québec is already on the hook to buy highly priced electricity that it doesn’t need and selling it at a loss on export markets. The utility pegs the cost of the surpluses at $1.5-billion over the next seven years, an expense that will be passed on to Quebeckers through their electricity bills.
It is for this exact reason that the PQ government cancelled six small dam projects this winter – and that electricity is cheaper than the wind-produced electricity whose cost has fluctuated between 10 and 12.5 cents per kilowatt-hour before hookup costs. Hence the surprise with Ms. Marois’ decision to go ahead with not only 700 MW of wind power, but with an extra 100 MW on top.
But wind is no ordinary business. It is more politically correct than nuclear. More importantly, it gives work to the Bas-du-Fleuve and Gaspé regions where good manufacturing jobs are hard to come by.
The Liberals had made “buy Québec” requirements in the first public tenders, with conditions such as a 60-per-cent local content. This gave birth to a wind manufacturing industry that could stop turning without new contracts. About 2,000 direct jobs are at risk, including 800 in those two high-unemployment regions.
The problem is, the new contracts might just postpone the inevitable, as these manufacturing facilities will have a hard time landing other contracts given the low cost of electricity produced by natural-gas-powered thermal plants and the high-flying Canadian dollar.
In the meantime, however, Quebeckers will heavily subsidize the manufacturing industry. Hydro-Québec, which says it learned of the political request on Friday like everybody else, is unsure if the additional 800 MW will be bought by its production or its distribution affiliate.
This is no small detail. If it is the production arm, the cost will be borne by Hydro-Québec’s main shareholder and ultimately all taxpayers. It would come at a time when the government is asking for more dividends from its utility to meet its zero-deficit target. If it is the distribution arm, then the cost will be passed on to all of Hydro-Québec’s clients, given how electricity rates are regulated.
This is something that Luc Boulanger, executive director of the Quebec Association of Industrial Electricity Consumers, will oppose vehemently the next time tariffs will be set. His association represents some 50 businesses that buy a third of the electricity consumed in Quebec. It estimates that if Hydro-Québec distribution buys all of the 800 MW of wind power, everybody’s electricity bills would go up by 1 per cent.
“Electricity users shouldn’t be paying for the government’s economic development policy,” Mr. Boulanger says.
But be it taxpayers or Hydro-Québec clients – and many are one and the same – one thing is clear. Quebeckers will pay a hefty price for this unneeded wind power.
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