2023-10-31 08:00:00
As Quebecers prepare to pay more for their electricity, Radio-Canada has discovered that around a hundred industrial companies benefit from a discount on their bill, up to 20%, offered by the Quebec government.
Several ArcelorMittal industrial sites have obtained it, as has the Nouveau Monde graphite mining company. However, it is impossible to access the complete list of companies, because it is confidential.
However, we were able to learn that 82 of Hydro-Québec’s 165 industrial customers, those who pay Rate L, benefit from the Investment Financial Assistance Program (PAFI). The rebate is not granted by the state corporation, but by the Quebec Ministry of Finance.
Large industrial customers pay the lowest electricity rate in Quebec, 30% less than residential customers, even before taking the rebate into account.
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The discount can be granted for a maximum of four years, or for eight years [soit jusqu’en 2032] in the case of a request of $250 million or more, indicates a document from the Ministry of Finance (New window).
For projects to be eligible, companies must demonstrate that they will increase their production, improve their productivity or start new production.
This reduction in electricity costs is granted independently of other forms of government assistance.
At some point, it becomes very difficult to know if it is industrial development that is profitable for Quebec, reacts Professor Pierre-Olivier Pineau, holder of the Chair of Energy Sector Management at HEC Montréal.
Will Northvolt be eligible for the rebate?
The Minister of Economy, Innovation and Energy Pierre Fitzgibbon declared on Sunday that the Northvolt battery factory will pay rate L, like the others. Will the Swedish company, however, be entitled to the discount on its invoice, which promises to be substantial?
This information is confidential, replies the Ministry of Finance. We have not had these discussions yet, adds Northvolt spokesperson Laurent Therrien.
The program has existed since 2017, but it was renewed by the Legault government. Companies have until December 31, 2023 to submit their application.
The Horne Foundry in Rouyn-Noranda told us that it did not benefit from it. Quebec aluminum smelters – 9 Hydro-Québec customers – benefit from a special rate per contract and this treatment does not allow them to accumulate the ministry’s rebate.
Quebec is already the place in North America where industries pay the least for electricity.
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The main problem that I see in these rebates is that it discourages companies from having greater energy efficiency, because they do not pay very much for this electricity, so they are not encouraged to improve their consumption.
Even more companies could benefit from the discount
The Ministry of Finance informs us that in addition to the 82 who already receive the rebate, 15 others have submitted a request, as of October 26, and are awaiting approval.
Companies that have submitted applications to PAFI benefit from it from the moment an audited report, attesting that investments have started, is submitted, explains the ministry.
The government notes an increase in requests for participation in the program and anticipates a bill of $231 million this year.
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The Nouveau Monde Graphite company has obtained the green light for its future installations to benefit from the electricity rebate from the Ministry of Finance.
Photo: New World Graphite
According to the Quebec Association of Industrial Electricity Consumers (AQCIE), 25 to 70% of the operating costs of large electricity consumers go into their Hydro-Québec bill. A 1% increase in the tariff can result in an increase of a million dollars for certain factories, according to the AQCIE.
It is a program that encourages industrial investments, defends the president of the Association of Large Electricity Consumers, several members of which benefit from the rebate, Jocelyn B. Allard.
According to a memorandum submitted in January to the Minister of Finance (New window)ArcelorMittal claims that the program is greatly associated with the 47.5% increase in its capital investments in Quebec, particularly in the mining sector.
Jocelyn B. Allard points out that the discount granted to manufacturers has no impact on the prices of other customers. Hydro-Québec collects Rate L and it is the government which subsequently grants the rebate, so it has no impact on the state corporation’s dividends.
Mr. Allard points out that the industrial sector pays more than what it costs Hydro-Québec to power it. Conversely, residential customers pay less than what the Crown corporation must pay to provide the service.
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