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Hydro-Quebec Industrial Rate | Companies asking for discounts



The demand for electricity is increasing sharply and companies that would like to invest in Quebec are not guaranteed to have it, but some that are already established there want even more discounts on their rates.

ArcelorMittal, which operates iron on the North Shore, and Rayonier Advanced Material, which manufactures pulp and cardboard in Témiscaming, are asking the Minister of Finance to renew the discounts granted since 2017 on the industrial rate (L rate) for companies that reinvest in their activities.

Rate L, which is already advantageous, is further reduced for businesses in the manufacturing and natural resources sectors that invest in their facilities. The rebate is equivalent to a reimbursement of up to 50% of the cost of the investment. This financial assistance is known as the Financial Assistance Program for Investment (PAFI) and it is due to end this year.

ArcelorMittal views “with apprehension” the imminent end of the PAFI, the company tells the Minister of Finance as part of the pre-budget consultations.

Without the PAFI, the Fire Lake mine expansion project in 2019 might not have seen the light of day, says the company in the written brief sent to the minister. This investment of 130 million made it possible to double the production of the mine, from 7.5 to 15 million tonnes. “Despite the benefits of the project, its deployment was not straightforward,” says ArcelorMittal.

The multinational also benefited from the PAFI to modernize its wire factory in Contrecœur, expenditure estimated at 120 million partly offset by a reduction in its electricity costs.

For its part, Rayonier, a lumber and real estate company, believes that the PAFI “makes it very advantageous for a company to increase its investments”. The company says it has invested 120 million in Quebec since 2017 and plans additional investments of 90 million between 2023 and 2025 thanks to the reduction of its electricity bill.

No balance sheet

With the end of electricity surpluses and the need for Hydro-Quebec to find new sources at a higher cost, the available energy will be allocated to the most promising projects for the Quebec economy, the government has been warning for many months Already.

The demand for new industrial projects totals 23,000 megawatts, according to Hydro-Québec, which estimates that 13 complexes like the Romaine should be built to meet this demand.

Since its creation in 2017, the PAFI has not been the subject of an assessment that would allow us to know the results. Investments totaling 5.6 billion were to result from this, according to information dating back to two years ago, in 2021. The Ministry of Finance then indicated that 159 requests for a reduction in Tariff L had been received, from 80 companies.

The cost of the PAFI, that is, the loss of revenue for Hydro-Québec assumed by the government, is not known either.

In numbers

Hydro-Québec production cost 3 cents per kilowatt hour

Rate L (without discount)
3.36 cents per kilowatt hour

Estimated cost of future supplies
11 cents per kilowatt hour

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