Industry group calls on Quebec to reverse course on planned electricity rate hike
A group of industrial giants is demanding Quebec reverse course on a plan to increase electricity rates, warning the hikes would put their businesses at risk at a time U.S. President Donald Trump’s policies threaten to destabilize key sectors of the economy.
The Alliance for Quebec’s Energy Competitiveness, a group made up of trade associations representing aluminum, manufacturing, chemicals, forestry and agricultural companies, said Mr. Trump’s recent actions have created significant uncertainty and pose a direct threat to Canada. It said now is not the time to undermine businesses operating in Quebec by making them pay more for power.
“We’re now facing a change of paradigm in the North American economy,” said Jean Simard, president of the Aluminum Association of Canada, which is part of the alliance. Mr. Trump’s pledge to monopolize investment and pull manufacturing into the United States through deregulation, renouncing clean energy, and cutting taxes amount to profound systemic changes that will be felt for years, he told reporters Monday.
Quebec needs to preserve its competitive advantages by continuing to use its clean power as an economic lever, according to the group. It called on Premier François Legault’s government to rethink its energy reform, adding that Quebec’s planned power price hikes run counter to efforts by the United States and other countries to lower electricity prices.
Quebec introduced new legislation last summer that sets up a new integrated energy resource management plan as the province works on an ambitious effort to double current electricity production to decarbonize its economy. The proposed law, known as Bill 69, aims to accelerate the development of new energy projects and allow for more private production, among other goals.
But it will also lead to higher rates for businesses. The alliance has calculated that under the bill, power rates for big industrial users could go up by 60 per cent over 10 years – a level it says would hit those companies at the worst possible time, as Mr. Trump ramps up his threats for tariffs against Canada while rolling out other measures that could have a more pronounced structural impact.
“Such an increase, combined with President Trump’s measures to boost American competitiveness and the looming threat of 25-per-cent tariffs on Canadian goods starting Feb. 1, would deliver an additional blow to our businesses, with potentially devastating consequences,” the alliance said in its statement. “By pricing electricity based on its true cost, Quebec can mitigate the impact of U.S. policy decisions.”
Quebec is home to several of the world’s biggest aluminum smelters and other major industry players – the result of offering the cheapest industrial power rates in North America. Those rates (about five cents a kilowatt-hour) are made possible by the low cost of production of Hydro-Québec’s own decades-old dams and its 1969 contract to purchase almost all of the power generated by the Churchill Falls hydro project in Labrador for 0.2 cents a kWh.
But the days of inexpensive power may soon be over. Bill 69 eliminates a price freeze on a so-called “patrimonial” block of electricity from older generating stations that has insulated large industrial customers from most rate increases until now. The bill empowers the provincial energy regulator to raise rates for industrial consumers based on a cost-of-service increment starting in 2026.
Quebec manufacturers are “very nervous” amid Mr. Trump’s threats and the province needs to provide them with some stability on power prices, said Julie White, chief executive of the Manufacturiers et Exportateurs du Québec. Some companies are weighing production cuts to deal with a rapidly changing business environment while others are considering freezing investments and projects, she said.
The Legault government signalled in December that it was sensitive to industry’s concerns about the timing and content of the new legislation. Christine Fréchette, Minister of the Economy, Innovation, and Energy, said Mr. Trump’s arrival “changes things” a bit in explaining why Bill 69 hadn’t yet moved through the legislative process.
“If there are tariffs that are imposed, it changes the nature of the competitiveness of businesses in Quebec and, consequently, we want to see how things will be placed before moving forward,” Ms. Fréchette said before the Christmas break.
Asked for comment, a spokesman for the minister repeated the crux of those comments Monday.
With files from Konrad Yakabuski
This article was first reported by The Globe and Mail
