On June 6, 2024, the Minister of Economy, Innovation and Energy, Mr. Pierre Fitzgibbon, introduced Bill 69, An Act to ensure responsible governance of energy resources and to amend various legislative provisions (“Bill 69”) in Québec’s National Assembly. This bill aims to modernize the energy sector and establish the elements required for a successful energy transition leading to complete decarbonization by 2050. Bill 69’s objectives include developing a long-term vision, promoting energy production to meet growing demand, and enhancing the role of the government and the Régie de l’énergie (“Régie”).
Bill 69 also aims to increase the responsiveness of energy supply and the transparency of energy distribution and transmission activities, while achieving regulatory efficiency to facilitate the approval of new renewable energy projects. Bill 69 primarily amends the Act respecting the Régie de l’énergie, the Hydro-Québec Act and thirteen other acts.
What are the key amendments proposed under Bill 69 and how could they influence Québec’s path to energy transition? The following sets out our preliminary remarks on this long-awaited reform.
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The Big News—An Integrated Energy Resource Management Plan: Bill 69 provides for the development of an integrated energy resource management plan (“IRMP”) for 2026 by the Minister of Economy, Innovation and Energy (“MEIE”), which will seek to address the government’s two energy transition goals, namely carbon neutrality by 2050 and the intention of attracting more businesses to Québec. Bill 69 aims to diversify Québec’s energy resources. The IRMP will be established for a 25-year period and updated every six years. The process of developing and updating the IRMP will be subject to a public consultation process directed and supervised by the MEIE. The IRMP must also be taken into account by the Régie when performing its duties and powers. Following this amendment, distributors’ supply plans will now be prepared for a 15-year period, in the case of Hydro-Québec, and for a 10-year period, for natural gas distributors. These plans must be prepared in compliance with the IRMP’s guidance and will continue to be approved by the Régie.
Another innovative aspect is the fact that, for Hydro-Québec’s transmission activities, it will have to propose a 15-year electric power transmission system development plan within six months of the Régie’s decision approving the supply plans. Furthermore, Hydro-Québec will now be required to publish its transmission system data as prescribed by regulation by the Régie, possibly on a continuous basis.
- Shorter Timelines and Reduced Administrative Burden: Bill 69 also aims to increase Québec’s production capacity by enabling the deployment of energy projects more quickly. Bill 69 aims to tackle the cumbersome tendering and permitting processes for the implementation of major energy infrastructure projects.
- Large-Scale Strategic Projects—Expanding the Role of the MEIE: The government is giving itself new approval authority for specific projects. The government will therefore have the authority to approve the entering into, renewal or extension of export contracts involving Hydro-Québec that are for a term of five years or more, or that provide for the production of 3 TWh/year or for more than 1,000 MW of capacity.
Bill 69 also upholds the MEIE authorization system for applications above a certain capacity, to be determined by regulation, while introducing measures to prevent the splitting up of capacity applications that would otherwise exceed the regulatory threshold. According to the information received, the regulatory threshold will remain at 5 MW. Authorized requests for capacity will also be required to comply with the conditions and deadlines for electric power consumption, failing which the MEIE may impose restrictions or even withdraw its authorization altogether.
- The Régie Regains More Flexibility for Setting Electric Power Rates: Bill 69 reinstates the setting of rates based on a cost of service basis for all consumers. Based on this amendment, the Régie will set Hydro-Québec rates over a three-year period, starting in 2026. In the event that Hydro-Québec expects its rates to increase by more than 3%, the government will be able to cover the increase in excess of 3% so that residential customers are not adversely affected by this increase. The government will cover the increase in excess of 3% through the Fonds d’aide à la clientèle domestique, to be established. This new mechanism will prevent Hydro-Québec from making up its shortfall with residential customers by increasing industrial and commercial rates.
Bill 69 will allow for “flexible rates options designed to encourage responsible use of electricity”1.
- Creation of the Fonds d’aide à la clientèle domestique (financial assistance program): Bill 69 enacts an Act respecting a financial assistance program to limit the impact of Hydro-Québec electric power distribution rate increases on the domestic clientele and establishing the Fonds d’aide à la clientèle domestique d’Hydro-Québec. This enacted legislation provides, among other things, that the government will establish the terms and conditions of a financial assistance program, that the program is administered by Hydro-Québec, and that a fund will be established.
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New Duties for the Régie: The Régie’s mandate is amended to include the idea of “energy transition.” It will also be responsible for determining the rates of a charging station network for electric vehicles.
With regard to Hydro-Québec’s recent announcement on its role as principal contractor for the 10,000 MW wind power generation project in Québec, these projects will, however, be outside the jurisdiction of the Régie since they will be authorized by the Québec government.
- Deregulating the Electricity Distribution Monopoly and Increasing the Private Sector’s Role: Bill 69 provides for greater involvement from the private sector in the production and distribution of energy, especially for overseeing the completion of some projects that could be supplied by both Hydro-Québec and independent producers in the same region. In order to further regionalize electric power distribution, Bill 69 will extend private energy sale powers between “adjacent sites” to all types of renewable energy, not only electricity generated from forest biomass, subject to the approval of the MEIE.
Bill 69 also provides for an increase in the threshold below which the government can lease hydraulic power in the domain of the State from 50 MW to 100 MW, paving the way for larger private hydroelectric projects.
- Amendments Applicable to Natural Gas and Hydrogen: With a view to diversifying the supply activities of natural gas distributors, Bill 69 provides for natural gas distribution to be carried out by truck or ship, and not solely via a pipeline network.
- Miscellaneous Amendments: Bill 69 also aims to fill a gap in the Act ending exploration for petroleum and underground reservoirs and production of petroleum and brine to allow for the closure of wells.
- Transitional Provisions: These numerous provisions will impact the rates and supply plans of Hydro-Québec and natural gas distributors for the years 2025, 2026, and 2027.
Conclusion & Next Steps
Bill 69 is expected to undergo broader consultations with the public and interested groups in the coming months until early autumn, and is expected to be enacted by the end of December 2024.
We will take the time to analyze Bill 69 in greater depth and issue a more thorough bulletin in the coming weeks.
Our team will continue to monitor changes to Bill 69 and keep you informed of how this will impact your businesses.
[1] Hydro-Québec, Towards a Decarbonized and Prosperous Québec – Action Plan 2035, p. 22.
