Application for 2014–2015 Rate Adjustment: Start of Public Hearings

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Each year, Hydro-Québec Distribution files a rate application with the Régie de l’énergie detailing the budget it will need to provide electricity service for the next year. If the electricity rates in effect do not allow the company to recover the cost of providing service, a rate adjustment may be made.

That’s the case this year. In early August, Hydro-Québec filed an application with the Régie de l’énergie for a 3.4% rate increase to come into effect April 1, 2014.

Public hearings regarding this application begin on December 6. Representatives of all interested parties will thus be able to review and debate the aplication. The Régie de l'énergie will then issue a ruling in early 2014. By law, it is the Régie that sets Québec electricity rates.

Understanding the rate adjustment

The main reasons for the adjustment are the cost of purchasing power from new wind farms (+2.7%) and indexing the price of the heritage pool (+0.8%). 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 also contributing to the cost increase (+1.4%).

However, Hydro-Québec will offset some of the additional costs with $160 million in efficiency gains, which is why the requested rate adjustment is limited to 3.4%.

Return rate revision

In a separate application, Hydro-Québec has asked the Régie de l’énergie to increase its rate of return to bring it into 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 return rate revision could add 2.4% to electricity rates as of 2014. The total impact of the rate application and the return rate revision application could thereforebe on the order of 5.8%.

Impact on electricity bills

If, upon due consideration, the Régie de l'énergie approves the two applications, the rate adjustment will add about $3.00 to the monthly electricity bill for an apartment, $7.35 for a small house, $10.40 for a midsize house and $13.35 for a large house.

For customers, Hydro-Québec's rates will still be among the lowest in Canada and North America as a whole.