The Potential for Electricity Market Restructuring in Quebec
Abstract
Abstract
In this paper we discuss the potential for future electricity market restructuring in Quebec. In particular, we consider the political economy of the abolishment of the Heritage Pool requirement, which caps wholesale prices. Its elimination is challenging since it would result in higher retail prices. However, if the extra revenue that would be earned from selling at the market price is properly redistributed, a majority of voters could benefit. We also examine the possibility of establishing a competitive wholesale market. The usual model of forced divestiture may not lead to a competitive outcome since most of Quebec's electricity is produced at large hydroelectric complexes cascaded on a few individual river systems. Consequently, Quebec might consider adopting the approach taken by Norway and join an expanded production pool.
Résumé
Dans cet article, nous analysons les conditions dans lesquelles on pourrait se faire une restructuration du marché de l'électricité au Québec. Nous nous attardons en particulier aux conséquences de l'abolition du système du bloc patrimonial, qui impose actuellement un plafonnement des prix de gros. Cette abolition posera un défi, puisqu'elle s'accompagnera d'une hausse des prix de détail. Nous montrons toutefois que, si les revenus supplémentaires obtenus grâce à des prix de marché plus élevés sont correctement distribués, une majorité des contribuables pourront en bénéficier. Nous étudions également les conditions qui permettraient l'établissement d'un marché de gros concurrentiel. Au Québec, le modèle traditionnel de dessaisissement obligatoire pourrait ne pas conduire à une situation de concurrence, étant donné que la plus grande partie de l'électricité est produite par de grands complexes hydro-électriques qui fonctionnent à partir d'un petit nombre de réseaux hydrographiques. Par conséquent, le Québec pourrait choisir d'adopter l'approche choisie par la Norvège, et joindre un pool de production élargi.
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Canadian Public Policy
Volume 33 • Number 1 • March/mars 2007
Pages: 1 - 19
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© University of Toronto Press Incorporated.
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Published in print: March/mars 2007
Published online: 1 June 2007
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Canadian Public Policy 2007 33:1, 1-19
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