D-2010-022, R-3708-2009, 2010 03 04
Decision D-2010-022 relates to an application from Hydro-Québec when carrying on electric power distribution activities (the Distributor) to modify its rates and certain conditions for the distribution of electric power effective April 1, 2010.
In its filing of August 2009, the Distributor asked the Régie to approve a uniform rate increase of 0.2%. After the return on equity (ROE) and average cost of capital projections were updated on the basis of the Consensus Forecasts of January
2010, the Distributor asked the Régie to raise its revenue requirement by
$25 million, which translated into a requested rate increase of 0.5%.
The uncharacteristic economic environment at the time of this rate case is significantly impacting the Distributor’s activities as a whole. One consequence is a projected 4.4 TWh decrease in sales in comparison with the 2009 rate case, resulting in a considerable loss of revenues, an increase in surplus supply to a total of nearly 10 TWh in 2010, and a significant decrease in post-heritage pool supply costs.
Among other things, the Distributor requested approval of a $72.8 million (5.8%) increase in operating costs. Were it not for an unusual increase in the charge for bad debts for residential and commercial customers, estimated at $28.3 million, the increase in operating costs for 2010 would have been $44.5 million (3.5%).
The rate application also reflects the $245.5 million financial impact of the change in depreciation method, which the Distributor requested in a separate case. The
Régie approved the change effective February 26, 2010 in its Decision
D-2010-020.
Authorized rate increase
The Régie authorizes the Distributor to recover a revenue requirement of $10.334 billion instead of the $10.345 billion it requested. The $10.7 million reduction reflects, among other things, a $6.9 million adjustment to operating costs.
1

D-2010-022, R-3708-2009, 2010 03 04
The Régie authorizes a uniform 0.4% increase in distribution rates, which will result in an estimated $0.43 per month increase for the average residential customer.
Distributor’s performance
The Régie has been monitoring the Distributor’s overall performance for several years using internal and external benchmarks. In view of past results and completion of the installation of the new customer information system, the Régie expects an improvement in the Distributor’s performance.
Capital expenditures
The Régie authorizes capital expenditures of up to $702.1 million, over and above already approved projects. In all, the Distributor’s authorized expenditures for
2010 total $841.7 million and relate primarily to grid maintenance and improvement.
Energy efficiency plan
The Régie approves a $249.0 million budget for the comprehensive energy efficiency plan (PGEÉ) for 2010. Of this amount, $81.0 million is allocated to residential customers.
The unfavourable economic environment in 2009 had a significant impact on
PGEÉ results. Aggregate energy savings in 2010 are projected at 4.6 TWh, whereas the Distributor had forecast 5.0 TWh.
Despite this shortfall related to the economic cycle, the Distributor reports confidence in achieving the target of 11 TWh by 2015. The Régie approves the
2

D-2010-022, R-3708-2009, 2010 03 04
Distributor’s energy efficiency programs. It requires the Distributor to develop a geothermal energy action plan and a commercial dual energy program.
Rates and conditions
The Distributor proposed a number of amendments to the Conditions of Electricity
Service , including changes to provisions to limit bad debts.
Among other things, the Régie authorizes the Distributor to require a deposit for new large-power contracts and construction sites. The Régie also establishes time frames for a cash deposit and an overdue notice for non-domestic contracts.
It also approves the Tariff amendments requested by the Distributor.
3