Demand for electricity is soaring and companies looking to invest in Quebec haven’t guaranteed it, but some already based there want even more discounts on their rates.
Posted at 6:00 am
ArcelorMittal, which operates iron on the North Shore, and Rayonier, which makes pulp and board in Témiscaming, are calling on the finance minister to renew industry tariff (L-rate) rebates granted since 2017 to companies reinvesting in their activities.
The already advantageous tariff L will be further reduced for companies in the processing industry and the raw materials sector that invest in their systems. The discount corresponds to a reimbursement of up to 50% of the investment costs. This financial assistance is known as the Financial Assistance Program for Investment (PAFI) and is scheduled to expire this year.
ArcelorMittal sees the upcoming end of the PAFI “with concern”, the company informed the finance minister during the pre-budget consultations.
Without PAFI, the Fire Lake mine expansion project may not have seen the light of day in 2019, the company says in the written letter to the minister. This investment of 130 million allowed the mine’s production to be doubled from 7.5 to 15 million tons. “Despite the benefits of the project, its deployment was not easy,” says ArcelorMittal.
The multinational also benefited from PAFI to modernize its wire factory in Contrecœur at an estimated cost of 120 million, partially offset by a reduction in its electricity bill.
For its part, Rayonier, a timber and real estate company, believes that the PAFI “makes it very beneficial for a company to increase its investments.” The company says it has invested 120 million in Quebec since 2017 and plans to invest another 90 million between 2023 and 2025 thanks to lowering its electricity bill.
No balance sheet
With the end of surplus electricity and the need for Hydro-Quebec to find new sources at higher costs, available energy will be reallocated to the most promising projects for Quebec’s economy, the government has been warning for many months.
Demand for new industrial projects totals 23,000 megawatts, according to Hydro-Québec, which estimates that 13 complexes like Romaine should be built to meet that demand.
Since its creation in 2017, the PAFI has not been the subject of an assessment that would allow us to know the results. According to information from two years ago, this should result in investments totaling 5.6 billion in 2021. At the time, the Treasury said it had received 159 requests for tariff L reductions from 80 companies.
The costs of the PAFI, i.e. the loss of revenue for Hydro-Québec assumed by the government, are also not known.
In numbers
Production costs of Hydro-Québec
3 cents per kilowatt hour
Tariff L (without discount)
3.36 cents per kilowatt hour
Estimated cost of future deliveries
11 cents per kilowatt hour