Following the surprise resignation of Hydro-Québec’s chief executive Thierry Vandal, new questions are being asked about the giant provincially owned utility with revenues of more than $13 billion.
Much of the media attention so far has centred on the possible role of smart meters in the recent departures not only of Vandal but of two other high-ranking executives, Marie-José Nadeau and Georges Ablad.
Sure, the installation of smart meters has been controversial – thanks in large part to a relentless campaign by unionized employees who lost their jobs because of them. But there’s a lot more going on at Hydro-Québec than that.
If Vandal isn’t saying much about his reasons for leaving, informed observers are filling in the blanks. One common view is that the job of running Hydro-Québec has become endlessly complicated by politics.
The utility is nominally independent but it has always danced to the tune of the government in power, ever since it was first created by the Liberal premier Adélard Godbout back in 1944.
Successive governments have used it for political purposes – from the Maîtres Chez Nous election campaign of Jean Lesage in 1963, when the remaining large power companies were nationalized, to the building binge at James Bay that drove Robert Bourassa’s political career.
When Vandal spoke briefly in public on Tuesday, he was quick to say he has no issues with the Couillard government and that this is simply the right time for him to move on. A new energy policy is due in Quebec this fall and his successor will have the chance to start with a clean slate, he noted.
But it’s a reasonable guess that Vandal may not like what’s in store for Hydro-Québec under the new energy plan. After 10 years of heady growth under his watch, the corporation is likely to be a much less active player now that it’s awash in large amounts of surplus electricity.
It’s also being squeezed for money by the cash-strapped government, which is taking an increasing share of dividends from Hydro-Québec’s profits and putting money away in its Generations Fund.
“I would link the decision of Thierry Vandal to the present situation,” said Pierre-Olivier Pineau, an energy specialist at the HEC Business School in Montreal. “For 10 years, he’s seen it all and played the game and he may be fed up with the difficulty of managing a company with political goals.”
Pineau says the government expects Hydro-Québec to play a lot of different roles, including economic development, the electrification of transportation, making healthy profits, keeping rates low for political purposes and developing green energy like wind power and biomass.
The development of wind is a good example of how politics can interfere with energy management. Previous governments under Jean Charest and Pauline Marois ordered up massive wind farms for their own reasons. The projects enhanced Quebec’s green image and contributed to regional development but weren’t needed to meet energy demand.
“Hydro-Québec was resistant,” said Pineau, “if not officially so. They never wanted wind. If they had wanted it, they would have asked for it. They tried to make the case for natural gas-fired power plants but they failed.”
The skills of the new CEO will be tested in many ways. Vandal’s successor will require the ability to reconcile politics, electricity management and the administration of an energy company that’s crucially important to the Quebec economy.
Building interconnections with neighbouring jurisdictions will be a top priority as Quebec seeks to sell off its energy surplus. Ontario is looking for alternatives to nuclear power and could become an important customer. New England wants clean, renewable power. There are at least two projects for new transmission links to New England and an additional one to New York.
“The new CEO will have to create these ties and sell hydroelectricity in the best possible way,” said Pineau, ” not only the energy itself but the environmental attributes of hydro power which are not currently recognized in the U.S.”
Look for domestic rates to become an issue, too. “Quebecers will not be able to avoid rate increases because the government will do as much as it can to get money from all sources.”
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