Hydro-Québec will propose rate modulation during peak periods

Hydro-Québec, which has applied to the Régie de l’énergie for a 0.8% increase in rates for its residential customers and the majority of business customers as of April 1, 2019, intends to offer them the possibility of modulating these rates during peak periods.

In fact, the Crown corporation plans to offer two “dynamic pricing” options starting in December 2019, rates that will vary according to the needs of its network, to cope with winter peaks.

“These dynamic pricing options will allow participants to lower their bill if they change their consumption habits,” said a statement.

“It’s essential for us to offer residential customers an incentive that will allow them to better manage their consumption and, ultimately, generate savings opportunities on their bill,” Éric Filion, president, told a news conference. Hydro-Québec Distribution.

“There is also a goal for Hydro-Québec, which is to better manage our demand for power during peak periods in winter,” he added. These peak periods there, so-called “critical hours”, represent about 100 hours per winter. “

There is really here with these options a win-win solution, said Mr. Filion

Hydro presents both options:

Critical peak credit

  • 50 ¢ / kWh credit  cleared at Hydro-Québec’s request
  • No risk for the customer
  • No change of tariff

Critical peak rate

  • High peak price: 50 ¢ / kWh consumed up to 3% of the hours in winter
  • Low price the rest of the time: reduction of about 2 ¢ / kWh compared to rate D in winter period

Hydro-Québec’s cancellation requests will target a maximum of 100 hours per winter, which corresponds to the number of “critical hours”.

The company estimates that customers who choose one of these options could save up to $150 per winter. But it will be those who will be equipped accordingly, says Jean-Thomas Bernard, visiting professor at the Department of Economics of the University of Ottawa, interview ICI RDI.

It takes residential customers who have backup systems, so those who have a sufficient wood stove.

Jean-Thomas Bernard, University of Ottawa

If this system of variable pricing is to be proposed on a voluntary basis, one could imagine that it will one day be imposed on all.

“It is not unthinkable that in the longer term, we will do the same as Ontario [where modulation is a daily basis]. In Quebec, we would have an annual base. That is to say that winter, it would be much more expensive for a few periods, says Mr. Bernard. Obviously, we will have to try to find alternatives, because heating, in winter, we need it! “

An increase below inflation

The state company said in its statement that the increase of 0.8% it wants to impose is lower than the inflation rate forecast for the year 2019, which is 1.8%.

It notes that, “for the fourth year in a row, [it] is fulfilling its commitment by asking the Régie de l’énergie for a rate increase under inflation”. She made this commitment in her 2016-2020 strategic plan.

What it means for a small home – a five-and-a-half unit – is a 23¢ change on the bill a month; for a small house, 69¢ per month; for an average home, $1.60 per month; and finally for a big house, $2.44 a month.

Éric Filion, President of Hydro-Québec Distribution

Hydro also wanted to  increase its rates by 1.1%  last year, but the Régie had  granted it a rise of 0.3% .

Electricity remains much cheaper and more predictable in Quebec than in most markets in Canada and the United States, Filion said.

He also noted that over the last 20 years, the cost of electricity has increased by 26% in Quebec, while the Consumer Price Index (CPI) has increased by 40%, and were 62% for a grocery cart, 82% for gas at the pump and 114% for home insurance.

According to Hydro, the increase requested is mainly due to:

  • the increase in certain distribution costs: + 0.1%;
  • the impact of investments in the high-voltage transmission network and maintenance activities, which will ensure a reliable and safe service: + 1.2%;
  • the increase in electricity purchase costs: + 2.2%.

It adds that two main elements allow it to limit to 0.8% the requested increase:

  • the growth in electricity demand resulting in particular from a sales increase strategy: -2.4%;
  • the effect of the temperatures of the last winters: -0.3%.

Hydro-Québec is thus able to return to its customers $46 million from the 2017 performance gaps.

Hydro also asked the Régie to increase the first consumption band from 36 to 40 kilowatt hours (kWh). Customers will be entitled to 4 kWh more per day at the lowest price, which will help to reduce their bill.

It will continue its support programs for low-income households, which aim to support the payment of bills and debt of certain customers who have entered into a payment agreement and to offer them energy efficiency programs that help them reduce their consumption. .

Over the next few months, the Régie de l’énergie and other stakeholders will review Hydro-Québec’s proposals, notably during public hearings. At the end of the fiscal year, in March 2019, the Crown corporation will or will not get permission to go ahead the following month.

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