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Media Report Plans for Landmark Shift in Electricity Regulation by Authorizing Private Distribution

The Government of Québec appears to be on the cusp of a major transformation in its regulation of the electricity market in the province. On January 19, 2024, news sources relayed that Energy and Economy Minister Pierre Fitzgibbon and the Quebec Government plan to introduce a bill before the National Assembly in the coming weeks which could make significant changes to Hydro-Québec's long-standing quasi monopoly in electricity distribution.

The bill would legalize direct electricity sales between private parties. Hydro-Québec, wholly owned by the Province of Québec, is currently virtually the only entity allowed to sell electricity to consumers, with only some exceptions for a few municipal and private distribution networks which have grandfathered rights.

This development, following a wave of interest in recent months for private electricity self-production projects, could be seen as the government’s answer to a growing need to supplement Hydro-Québec’s supply capabilities. While Hydro-Québec plans significant expansion to infrastructure, the increasing demand from industries outpaces its current supply capacity and private electricity production has been gradually viewed as a solution.

The bill would aim to allow greater integration of private sector producers and distributors into the existing electricity framework. Currently, companies in Quebec have a right to self-produce their electricity, but are restricted to using it solely for their needs. While the bill has not yet been confirmed by officials, nor has it been tabled, it is suggested that section 60 of the Act respecting the Régie de l’énergie, among other changes, could be amended to expand this right to self-production to include a right to distribute electricity to industrial businesses located near the source of production. A similar privilege currently exists but only for biomass energy located in the immediate vicinity of the generation facilities. The proposed changes could extend to all forms of renewable energy like wind, solar, and hydro.

As reported by the media, this bill has the potential to be one of the most important reforms to the province’s energy regime since the nationalization of electricity in 1962. Our team at McCarthy Tétrault is closely following this major development in Québec. If you would like more information about this and other energy matters here in Québec, we are here to help. Please contact Louis-Nicolas Boulanger, Mathieu LeBlanc, Jacob Stone or Xin Gao or any other member of the energy group at McCarthy Tétrault with any questions or for assistance.

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