Montréal, July 29, 2016
Requested rate increase of 1.6% - Hydro-Québec honors its commitment with a rate application below inflation
Hydro-Québec Distribution has filed with the Régie de l’énergie for a rate adjustment of 1.6%, effective April 1, 2017, for all residential customers and most business customers. This application is in keeping with the company’s commitment of keeping rate increases at no more than inflation.
The requested rate increase is mainly due to
- capital investment needed to ensure transmission asset sustainment, in particular for replacement of PK model circuit breakers (1.5%);
- higher costs for power purchases: heritage pool, new supplies and short-term purchases (0.4%);
- lower-than-anticipated demand (0.9%).
However, these factors are partially offset by the return to normal temperatures during winter 2015–2016 (-0.6%) and a reduction in the cost of service (-0.6%) mainly due to productivity gains, thus limiting the requested increase.
It should be noted that, without the $432 million in efficiency gains achieved by Hydro-Québec Distribution over the past 10 years, rates would be about 4% higher in 2017–2018.
The impact of the 1.6% rate adjustment would be $0.43/month for an apartment, $2.36/month for a small house, $3.84/month for a midsize house and $5.11/month for a large house.
Hydro-Québec’s rates will remain the lowest in North America—less than half of what people pay in Toronto and a quarter of what they pay in New York.
A benchmark in customer service
The rate application also takes into account the steps taken by Hydro-Québec to become a benchmark in customer service. For example, service hours have been extended to evenings and weekends since the end of June 2016. In addition, customers now have a variety of Web-based and telephone self-service options at their disposal, enabling them to conduct transactions, track the progress of their work requests, get information about power outages and manage their energy consumption.
A simpler and fairer rate structure
In the interest of simplicity and fairness, Hydro-Québec is also presenting the Régie with new residential (domestic) rate strategies. These strategies, which will be implemented gradually over the coming years, are mainly designed to reduce the small consumer’s electricity bill while encouraging larger consumers to save electricity. They include
- extending the first tier of consumption, i.e., the portion billed at the lowest rate;
- eliminating the 40¢/day fixed charge and introducing a minimum charge for customers who consume little or no electricity;
- introducing a new rate for the largest consumers, including farms with a power demand of 50 kW or more.
Support for low-income customers
Hydro-Québec will continue its programs for low-income customers. It is proposing a budget of $30 million, most of which will go toward supporting payment of the bills and arrears of customers who have negotiated payment arrangements.
In addition, Hydro-Québec Distribution plans to allocate about $8 million for programs designed specifically to help low-income customers reduce their energy consumption.
Hydro-Québec Distribution intends to earmark $115 million for energy efficiency programs and initiatives that will generate additional energy savings of some 430 GWh and reduce capacity requirements by 165 MW.
Large-power industrial rate
In accordance with the Act respecting the Régie de l’énergie, indexation of the heritage pool price will not affect large-power industrial customers (Rate L). The increase for these customers on April 1, 2017, would therefore be 1.1%.
Review and hearings
Each year, the rate application is carefully reviewed by the Régie de l’énergie. The review ends in December with public hearings, during which representatives of all concerned organizations have an opportunity to express their views. The Régie hands down a decision at the beginning of the following year, so that the new rates can take effect on April 1.