Modernising Quebec's Energy Sector: An Overview of Bill 69

August 12, 2024

Written By Yannick Beaudoin, Alexis Fol and Chloe Cho

The Quebec government is proposing to bring many changes to the legislative and regulatory landscape governing the energy sector in Quebec,¹ including the Act respecting the Régie de l'énergie and the Hydro-Québec Act (the HQA).

Bill 69 will be the subject of consultations this fall. This will provide an interesting opportunity for all stakeholders in the energy sector in Quebec to contribute to the modernization of the regulatory framework.

A look at the most significant changes introduced by Bill 69 is provided below.

Rationale for Bill 69

Quebec wants to be the first carbon-neutral jurisdiction in North America by 2050. To achieve this, the government estimates that Quebec must double its current electricity production within the next 25 years. However, according to the Quebec Energy Minister, Quebec's energy sector is not adapted to overcome these challenges. "We need to develop in 25 years what it has taken Quebec 100 years to build, and our current processes are much too slow," said the Minister at a recent press conference.

As a result, the Quebec Energy Minister proposes through Bill 69 to modernize the regulatory framework governing the energy sector to equip Quebec with the tools to be [translation] “more agile to increase the production of clean energy”.

Key amendments

New Projects and Independent Production

Bill 69 modifies Hydro-Québec's mission by adding, among other things, its duty to: "contribute to the energy transition, promote sound management of energy consumption and act in a manner that maximizes the economic, social and environmental benefits in Quebec". The Quebec Energy Minister drew a parallel between Hydro-Québec and the Caisse de dépôt, saying that the expansion of Hydro-Québec's mission will contribute to the province's economic development.

Under Bill 69, Hydro-Québec will now be able to enter into bilateral power purchase agreements in its role as an electric power distributor, subject to obtaining the prior authorization from the Régie de l’énergie (the Régie). Exceptions to the requirement to obtain the Regie's approval are (i) for an emergency; (ii) for a contract lasting less than 3 months; (iii) when a contract is authorized by the government; and (iv) when Hydro-Québec awards a contract for the supply of electric power from renewable energy sources by way of a public call for tenders that ensures that the electric power suppliers responding to it are treated with fairness and impartiality.

Bill 69 raises the threshold for Quebec's government to lease hydraulic power from 50 MW (megawatts) to 100 MW.

In addition, Bill 69 encourages private production by allowing the sale of electricity from renewable sources between a generator and a single consumer located on land adjacent to the production site, subject to government approval. While the notion of "adjacent" is not defined in Bill 69, the government press release concerning Bill 69 provided that the intention with the proposed change to self-generation is to offer [translation] "flexibility to enable the development of projects that cannot be connected to Hydro-Québec's grid, or to make certain infrastructures of a producer profitable with energy surpluses."

Bill 69 also requires Hydro-Québec to obtain the Minister's approval to distribute electric power in certain situations defined by the Régie. Until those situations are specified, Hydro-Québec must get Ministerial authorization to distribute power to any person requesting 5,000 kilowatts (5 MW) or more if no agreement providing financial commitment from that person was made prior to December 2, 2022.

Finally, Bill 69 focuses on the development of the renewable gas sector by proposing various measures to offer more flexibility and efficiency to natural gas distributors.

Changes at Hydro-Québec

With the objective of allowing Hydro-Québec to develop projects more quickly, Bill 69 proposes to no longer require Hydro-Québec (a Crown corporation) to proceed solely by calls for tenders. However, in cases where Hydro-Québec does not proceed by means of a call for tenders, the Régie will have to approve the contracts.

Bill 69 also requires that Hydro-Québec provide to the Régie a 15-year electric power supply plan prepared in compliance with an integrated resource management plan (IRMP)—more details on such plan in Section 4 below. Previously, Hydro-Québec had to provide a 10-year plan to the Régie.

Further, Bill 69 modifies the powers of Hydro-Québec enunciated in the HQA by now requiring that it obtain governmental approval for acquiring or holding a controlling interest in another entity. Subject to governmental authorization, such entity will now have the same powers as Hydro-Québec in carrying out its activities and will benefit from all the rights of Hydro-Québec, unless its powers or rights have been restricted by its constituting act.

Redefinition of the Mission of the Régie

Bill 69 increases the powers of Quebec's energy regulator, the Régie. Indeed, Bill 69 gives the Régie the responsibility of setting electricity rates every three years rather than every five years. This rate review mechanism will now be established on the basis of Hydro-Québec’s costs and no longer on the basis of the current rate indexation mechanism.

Bill 69 also gives the Régie the power to set the rates and conditions of service for the public network of fast-charging stations for electric vehicles.

The Régie is also given a new role as Bill 69 proposes to modify its mission to include the notion of "energy transition" in its mandate in addition to adding a consumer information component.

In addition, Bill 69 allows the government to indicate "the economic, social and environmental concerns that the Régie must consider in any decision it makes".

Integrated Resource Management Plan

Bill 69 proposes to implement the IRMP detailing Hydro-Québec’s objectives and targets to be achieved to decarbonize Quebec by 2050. This management plan, described as the centrepiece of Bill 69 by the Minister, must present possible solutions to achieve the decarbonization of the province, by including electricity and other energy sources (such as gas and renewable energies). The IRMP will define the overall vision for the energy sector and its planning horizon is 25 years. The Minister is responsible for establishing the IRMP and updating it every six years, incorporating insights from public consultations held during its development.

The Minister must submit the first IRMP for governmental approval by April 1, 2026. Until then, the target for electric power supply is set to 255 terawatt-hours for January 1, 2035.

New Responsibilities of the Minister

Through Bill 69, the Minister has the new responsibility of "supporting, stimulating and promoting the production of energy as well as the development of new energy systems" and of "promoting the development of Hydro-Québec’s activities".

Details about these new responsibilities are still to come, but this might suggest that businesses proposing new projects in the energy sector may have to interact more directly with the Minister throughout different phases of their projects. This could involve seeking support and possibly collaborating on initiatives aligned with the Minister's objectives.

Finally, the Minister's mission is modified by Bill 69, as the Minister must "[...] ensure responsible and integrated management of energy resources, with a view to energy transition and economic development".

For a complete understanding of the impact of Bill 69, please contact one of the authors.

Bennett Jones has extensive experience in the energy industry—including electricity and renewables—and has the largest energy legal group in Canada. For any question or if you need help with a project, please contact the authors or our Energy group.

The authors thank William Gogas-Lirette, summer student, for his contributions to this blog.

Authors