Hydro-Quebecers, know that the indexation of the price of heritage electricity will cost you a nasty butter over the next few years.
Over the five fiscal years from 2022-23 to 2026-27, we will have to pay the total sum of $5.1 billion in terms of indexing the rates of so-called heritage electricity, which sum is intended for the Generations Fund.
What am I basing myself on to launch such an astronomical income of $5.1 billion that Hydro-Quebec will come to take from the pockets of its customers and then transfer it to the coffers of the Government of Quebec through of the dividend he pays her annually?
On the revenue forecasts of the Generations Fund that were published in the Pre-election report on the state of public finances, which was made public last week by the Minister of Finance, Eric Girard, with the endorsement of the Auditor General from Quebec, Guylaine Leclerc.
Strong increases
Here is the distribution of these hydro-electric receipts of 5.1 billion dollars, namely the amount for each of the fiscal years, with, between parentheses, the percentage of increase, from one year to the next.
- 2022-23 : 550 millions $ (+ 12,7 %)
- 2023-24 : 780 millions $ (+ 41,8 %)
- 2024-25 : 1125 millions $ (+ 44,2 %)
- 2025-26 : 1260 millions $ (+ 12,0 %)
- 2026-27 : 1385 millions $ (+ 9,9 %)
In percentage terms, you will notice that the annual increase in revenue from the indexation of heritage electricity is quite hefty.
A technical question, now: how is the amount of these annual revenues from the indexation of electricity determined?
According to the Hydro-Québec Act, section 15.1.1, the Minister of Finance must pay into the Generations Fund, out of the dividend paid by Hydro-Québec, the amount “that the government allocates to the indexation of the average cost of supply of heritage electricity since 2014, for each fiscal year ending from that year”.
Additional contributions
In addition to this revenue from the indexing of heritage electricity, there are two other sources of revenue for Hydro-Québec, which are also intended for the Generations Fund.
Under the Hydro-Quebec Act, the Crown corporation must pay, through its dividend to the Government of Quebec, an annual sum of $215 million “for each fiscal year ending from the year 2017, until the one ending in 2043”.
This will bring in a pot of some $1.1 billion over the next five years.
The other source of revenue from Hydro-Québec that will end up in the Generations Fund? These are hydraulic royalties, a bill that Hydro must assume, and which, of course, is passed on to us in the electricity tariff.
In the current fiscal year 2022-23, the amount of water royalties that Hydro will pay to the government will amount to $782 million. For the whole of the five years (2022 to 2026), the Minister of Finance, Eric Girard, plans to collect from Hydro royalties of $4.2 billion.
The countdown
It is therefore a total sum of $10.4 billion ($5.1 billion in indexation; $1.1 billion in additional contribution; $4.2 billion in royalties) that Hydro should pay over the next five years. to the Government of Quebec, in order to replenish the coffers of the Generations Fund.
Drawn from our Hydro-Québec bills, this amount represents 48% of government revenues that will be transferred to the Generations Fund within five years.
As a consolation prize, tell yourself that these 10.4 billion dollars are intended to bail out the government debt!