Montréal, April 21, 2017
The Facts on Hydro-Québec’s Earnings Variances
Hydro-Québec’s earnings variances, also referred to as earnings surpluses, has made the news rounds lately. A great deal of false information has been spread, and the time has come to set the record straight. The truth is: These earnings variances have directly benefited Hydro-Québec customers and all Quebecers, and they are a testament to the vitality of the publicly owned corporation.
Our customers have not been overbilled
Between 2008 and 2015, our customers paid for their electricity according to the rates set by the Régie de l’énergie, and not a cent more. There was never any overbilling. For each of those years, the Régie de l’énergie set the rates after an analysis period that spanned several months, during which Hydro-Québec’s figures were closely scrutinized by dozens of independent experts.
During this period, Hydro-Québec performed better than expected, thanks to better cost controls. Since 2007, Hydro-Québec has decreased its staff by 3,300 employees, all while adding 346,000 customers to its network. The earnings variances stem directly from this productivity boost.
Our customers have benefited from the earnings variances
Hydro-Québec customers and all Quebecers have benefitted from the earnings variances. First of all, the productivity we gained from improving our processes translate, year after year, into limited rate hikes for our customers. For example, the roll-out of next-generation meters generates $80 million in savings per year, and that is money that our customers do not have to pay as part of their electricity rates.
The earnings variances are also a boon to Quebecers through the dividends paid by Hydro-Québec to the government every year, under the Hydro-Québec Act.
Forecast variances are perfectly normal
Hydro-Québec submits its rate applications 20 months before the end of the year they cover. Economic parameters, such as interest rates and economic growth, may fluctuate considerably between the moment forecasts are made and when the rates go into effect. Hydro-Québec Distribution has a $12 billion annual budget. Earnings variances over the past few years have been no larger than 1%. In other words, Hydro-Québec’s forecasts have proven to be accurate 99% of the time. All companies are likely to see differences between their budget forecasts and their bottom line. They are but forecasts.
Hydro-Québec is firmly committed to continuously improving its productivity. Our efforts and results allow us to offer our customers the lowest electricity rates in all of North America. We take great pride in them.