State Intervention: Hydro-Québec Approved, La Caisse Rejected

State intervention in the economy is a significant topic, especially in the context of Hydro-Québec and its role in Quebec’s energy landscape. Recent discussions highlight differing views on the financial involvement of the province’s investment organization, La Caisse de dépôt.

Hydro-Québec’s Competitive Advantage

Premier François Legault emphasizes the exceptional potential that Hydro-Québec provides to Quebec, describing it as a “blessing.” He points out that the province can develop its green energy, benefiting from Hydro-Québec’s extensive water reservoirs, which function as storage batteries for renewable energy sources.

• Hydro-Québec provides energy at approximately 6 cents per kilowatt-hour.
• This price is significantly lower than hydroelectric projects, averaging 10 cents, and nuclear energy at 16 cents.

Legault believes the expansion of the energy sector could create about 35,000 jobs annually by 2035. Additionally, for 2026, Hydro-Québec expects to need around 23,500 workers for various projects.

The Challenges Ahead

Despite the optimistic view of energy development, there are expected challenges. Environmentalists and various communities may oppose certain projects, raising questions about regulatory processes. Legault mentioned the potential for streamlining environmental assessments to accelerate project initiation, suggesting a shift in the usual approval timelines.

Renegotiating Agreements

Talks regarding agreements with Newfoundland and Labrador are also on the agenda. The recent election of Premier Tony Wakeham brings the prospect of renegotiation to the forefront. Legault stresses that the current deal, which provides Newfoundland with $300 million annually from Quebec, is fair given its impact on the provincial budget.

The Role of La Caisse

Legault’s strategy includes the active role of La Caisse de dépôt within Quebec’s economy. Discussions are ongoing with La Caisse’s leadership, aiming to increase local investment. He argues that pension funds across Canada should also dedicate more resources to local projects.

• As of December 31, 2024, 19.8% of La Caisse’s assets were invested in Quebec.
• This is contrasted with only 10.5% for the Canada Pension Plan Investment Board.

Legault acknowledges the importance of diversifying investment but insists on enhancing the focus on Quebec. He suggests that La Caisse may consider investing in critical minerals, albeit acknowledging the cyclical risks in the mining sector.

Conclusion

The path forward involves balancing state intervention and ensuring the economic stability of local enterprises. As discussions progress, both the potential benefits and risks must be carefully navigated. A strategic approach toward Hydro-Québec and La Caisse’s investments can create opportunities for Quebec’s economy while sustaining its competitive edge.