Hydro-Québec Distribution files its 2014–2015 rate application with the Régie de l’énergie

Hydro-Québec has filed an application with the Régie de l’énergie for a 3.4% rate adjustment effective April 1, 2014. The main reasons for the adjustment are the costs of purchasing power from the new wind farms and indexing the price of the heritage pool. However, Hydro-Québec will offset some of these additional costs with $160 million in efficiency gains, which is why the requested rate adjustment is only 3.4%.

More specifically, there are four factors behind the requested adjustment. First, the commissioning of new wind farms, under purchasing programs decreed by the Québec government, is putting upward pressure on electricity supply costs for the Québec market (+2.7%). Second, the heritage pool, which covers over 90% of Québec’s electricity needs, will be indexed as of 2014, as provided by the Act respecting the Régie de l’énergie (+0.8%). Third, additions to the transmission and distribution systems, made necessary by the growth in residential and commercial demand throughout Québec and approved by the Régie de l’énergie, are contributing to the increase in costs (+1,4%).

Efficiency gains of $160 million will partly offset (−1.5%) the first three factors, thereby limiting the requested adjustment to 3.4%.

Rate adjustment

If Hydro-Québec’s application is approved by the Régie de l’énergie, the rate adjustment will add about $1.70 to the monthly electricity bill for an apartment, $4.30 for a small house, $6.10 for a midsize house and $7.87 for a big house.

For residential customers, Hydro-Québec’s rates will still be among the lowest in Canada and North America.

Under the Act respecting the Régie de l’énergie, indexation of the heritage pool does not affect industrial customers, so their increase would be 2.6%.

Energy efficiency
Hydro-Québec Distribution’s proposed budget for energy efficiency programs and activities is $135 million. This amount will help generate energy savings of 464 GWh in 2014, bringing the cumulative total to almost 8 TWh.

Support for low-income customers
Hydro-Québec Distribution will maintain its programs for low-income customers. It is proposing a budget of $17.8 million, mainly to help customers who have personalized arrangements to pay their electricity bills and arrears.

Hydro-Québec Distribution is also proposing to invest close to $10 million in energy efficiency programs for those customers.

Approval process
Public hearings on the rate application will enable representatives of all interested parties to review and debate the proposal. The Régie de l’énergie will then issue a ruling in early 2014, with the new rates taking effect April 1, 2014. By law, it is the Régie that sets Québec electricity rates.

Rate of return and surplus-sharing mechanism
In a separate application, Hydro-Québec has asked the Régie de l’énergie to increase its rate of return to bring it line with that of similar companies in Québec and elsewhere in North America.

This application includes a proposed sharing mechanism that would enable customers to benefit from Hydro-Québec’s cost reductions.

The Régie de l’énergie’s ruling on this application is expected in early 2014. The revision of the return rate as requested by Hydro-Québec could add approximately 2% to electricity rates as of 2014.

Information:
Patrice Lavoie
Hydro-Québec
514 289-2097

Hydro-Québec Distribution’s rate application (in French) is available on the Régie de l’énergie’s Web site: www.regie-energie.qc.ca.