Hydro-Québec's Trajectory
Beginnings
When it was created in 1944, Hydro-Québec operated only four power plants concentrated in the greater Montreal area. All the rest of Quebec was under the control of private power companies, each with its own rates. In post-war Quebec, the demand for electricity was growing at the same rate as the economy, doubling every ten years. This very rapid growth forced power companies to launch major projects at a frantic pace.
Most of the rivers near the major urban centres had already been harnessed in Quebec. What lay ahead were huge hydroelectric dam construction projects in remote areas. This required huge investments of frozen money for many years before there was a monetary return on this financing, which also had its share of risks, something that private electricity companies were not prepared to do. This is where Hydro-Québec comes in as a state-owned company that will take all these risks while the big financiers from Wall Street and elsewhere lend money to Hydro-Québec to finance such large projects while being guaranteed by the Quebec government a return on their investments.
Nationalization with
Compensation of Private Electricity Companies
In 1962, the 11 private electricity companies were nationalized by the Liberal government of Jean Lesage. They had the advantage of being spread throughout Quebec, but they were dominated by Anglo-Canadian, U.S. and British interests, which would not accept being nationalized without compensation. These eleven companies were also major donors to political parties in Quebec.
The Lesage government called a
referendum on this
nationalization project in the fall of 1962 under the slogan
"Now or
never, masters of our own country." The argument put to
Quebeckers was
that with nationalization, everyone would be able to pay the
same
electricity rate and control the
development of this natural resource. On November 14, 1962 the
Liberals
won the election. The eleven private electricity companies were
bought
out for a sum of more than $600 million, which was a huge sum
considering that the Quebec government's revenues in 1961-1962
were
$750 million.
On the other hand, the Lesage government never wanted to nationalize the facilities of the 30 or so industries producing electricity for their own purposes, the largest of which was Alcan, which already operated 2,000 megawatts in the Saguenay and Lac-Saint-Jean regions. Even today, the 640 workers of Rio Tinto Alcan's Énergie électrique subsidiary are responsible for the operation and maintenance of its 28 dams and six power stations, which represent the second largest hydroelectricity production site in Quebec.
1981 to 1989 --
Hydro-Quebec's Change of Mandate for Commercial Purposes
One of the major projects Hydro-Québec began in 1959 was the harnessing of the Manicouagan River on the Quebec North Shore. It was during this period that many of the engineers hired by Hydro-Québec were trained in the construction of these large hydroelectric dams, including one of the largest multiple arch dams in the world. Hydro-Québec's engineering expertise was later developed with new innovations such as the construction in the 1960s and 1970s of the world's first 735,000 volt high-voltage transmission lines.
But all this know-how began to be taken over by the big U.S. engineering firms. In 1970, the Liberal government of Robert Bourassa announced plans to build hydroelectric dams on the rivers of the James Bay basin, without the consent of the Cree First Nation, which had never ceded their immense territory. He had to deal not only with the resistance of the Indigenous peoples but also with the demands of the big Wall Street financiers who made it a condition of lending the money required by Hydro-Québec that the project manager for this gigantic project be the U.S. consulting engineering firm Bechtel.
Between 1978 and 1983, a series of legislative measures transformed the mission and structures of Hydro-Québec. The team of independent commissioners that had been in charge since 1944 was replaced by a board of directors, whose 11 members were appointed by the government. Hydro-Québec then became a commercial company subject to the government and required to generate profits. Hydro-Québec's legal status and financial structure were changed. The government became Hydro-Québec's "sole shareholder." Its productivity gains were no longer translated into lower rates, but into dividends paid to the government. In 1989, a new amendment to the Act governing Hydro-Québec reinforced this commercial vocation by explicitly giving the Crown corporation the mandate to export electricity and to carry out activities in any field related to energy.
Neo-liberalism and the
National Destruction of the 1990s
Since the early 1990s the buzzword has been "liberalization." The U.S. financial elite and others were looking for ways to break up the energy monopolies held by the states. The idea was to divide generation, transmission and distribution into three separate entities that private companies could buy up. This liberalization required the creation of new regulatory frameworks and the organization of the electricity market into trading zones.
This liberalization of energy markets initially allowed Hydro-Québec to sell its surplus electricity at a much higher price than on the domestic market. The only catch: the U.S. Federal Energy Regulatory Commission (FERC) would never allow Hydro-Québec to enter the U.S. market if the Quebec government continued to protect its domestic monopoly.
To comply with the FERC's demands, the Quebec government transformed Hydro-Québec into a holding company in 1997, bringing together three commercial companies: Hydro-Québec Distribution, Hydro-Québec Transport (known as TransÉnergie) and Hydro-Québec Production, in order to comply with the rules of the U.S. market. The creation of the Régie de l'Énergie in Quebec the year before, with its quasi-judicial powers, had been another FERC condition.
With the change in Hydro-Québec's status to that of a commercial enterprise, the electricity rates proposed by Hydro-Québec were now debated in parliamentary commission and then decided in the Premier's office. With the establishment of the Régie de l'énergie du Québec in 1996, Hydro-Québec must now defend each request for an increase and appear before the regulators. However, the government can act on the Régie through laws and decrees.
In December 2019, the Legault government passed under closure Bill 34, An Act to simplify the process of setting electricity distribution rates.
This law exempts Hydro-Québec from an annual review by the Régie de l'énergie as of 2020 in terms of justifying its requests for rate increases and its plans to sell and/or export energy. It is therefore the CAQist government that takes control of dictating electricity rates and opening the market for the sale of blocks of energy to supranational industrial concerns which operate in Quebec and also the export of energy. This is what it means to politicize narrow private interests. These interests directly usurp the decision-making power.
This article was published in
Volume 52 Number 52 - December
2, 2022
Article Link:
https://cpcml.ca/Tmld2022/Articles/D520522.HTM
Website: www.cpcml.ca Email: editor@cpcml.ca