Quebec’s power-challenged education plan2/27/2013
What started with massive protests over tuition fee hikes and a nightly concert of pot bangers ended in a tightly scripted meeting whose foregone conclusion left many muttering in dissatisfaction. But the higher education summit is billed as a political success for Pauline Marois, the Quebec Premier who truly lost her red square while putting the lid on social unrest gone lukewarm.
And so it is that Quebec’s tuition fees will be unfrozen to rise at the same pace as disposable family income, roughly 3 per cent a year. This is close to $70-a-year hike, which slightly surpasses inflation and ensures tuition fees in Quebec will remain about half as much as in British Columbia and about a third of fees in Ontario, on average. It is a far cry from the increase the famished Quebec universities were begging for. Yet it is still too much for the students who advocated free university tuition.
But then, there are consolation prizes for just about everybody. Student loans and bursaries will swell. And Quebec wants universities to hire 4,000 new professors, contract instructors and technicians. The government plans to inject an extra $1.8-billion in higher education by 2019, although none of this money will come soon.
Ms. Marois bought an expensive peace. Problem is, no one knows how Quebec will pay for it. About the only certainty is that the province cannot count on out-of-province electricity sales to export its way out of this predicament.
Just as Alberta is in a funk over its falling resource revenues, the province of bountiful hydroelectricity is facing a dim outlook because of the energy revolution in the United States. The question is not so much one of access to the market like for the oil sands but of abundant supply in the U.S. and falling prices.
The upheavals in the natural gas market have attracted the most attention with the rapid rise in American production unlocked by new exploration and drilling techniques. In seven years, the United States expects to become a net exporter of gas. But the electricity market is also facing similar disruptions, research by National Bank Financial asserts.
Canada’s electricity exports are expected to fall sharply with the rise of U.S. production from gas-powered thermal plants and renewable power generation
After revising its forecasts, the U.S. Department of Energy believes that 2012 was the peak year for electricity imports. It predicts volume electricity imports will fall 44 per cent by 2030, with the steepest drop in coming years.
This spells bad news for Hydro-Québec. In its last strategic plan, the state-owned electricity producer expected that in 2013, its net electricity exports would represent 12 per cent of its sales and 38 per cent of profit. In 2011, its last full year, Hydro-Québec’s earnings stood at $2.6-billion on sales of $12.4-billion.
“Significant revisions to U.S. Department of Energy projections underscore the need for Canada to rapidly redefine its energy strategy,” writes Stéfane Marion, NBF’s chief economist and strategist.
Voices in Quebec have been demanding just that, an energy summit like this week’s higher education summit, given that Hydro-Québec’s problems are compounded by electricity surpluses.
The state producer expects electricity surpluses until 2020. Just how big those surpluses will be is a matter of debate. Hydro-Québec pegs them at 21,4 terawatt-hours over the next seven years, while energy analyst Jean-François Blain estimates them at 72 terawatt-hours. One terawatt-hour can power over 50,000 homes for a year.
Of course, you can’t blame Hydro-Québec for not having foreseen the “fracking” revolution or the last recession, which impacted industrial demand. But Hydro-Québec added generation capacity it knew it didn’t need, its president, Thierry Vandal, admitted this month in front of National Assembly members. The producer only did what it was ordered, he pleaded.
Although Mr. Vandal came across as a guy from the previous administration trying to save his job, he was right. The Liberal government ordered Hydro-Québec to hold public tenders to buy electricity from small dams and wind farms operated by private promoters. While less inclined to intervene in the economy, the Liberals used Hydro-Québec for regional development purposes. And if Hydro-Québec’s conservative figures are correct, these surpluses will now cost Quebeckers $1.5-billion. That is close to the amount the Marois government hopes to reinvest in higher education.
The PQ government, to its credit, is cleaning up some of the mess. Besides dismantling Quebec’s only nuclear plant, it just cancelled six projects to build small dams that represent 50 megawatts of power, an unpopular move in many regions. But the PQ still hasn’t abandoned the province’s plan to acquire 700 MW of costly wind-powered electricity, the last of the 4,000 MW the liberals had committed to.
Quebec has no need for this electricity. But that would mean going against the greens who hold a lot of sway within the PQ caucus. And if the education summit taught us anything, Premier Marois will buy peace once more.
(Globe and Mail)