Thank you for your question on the relatively little-known subject of earnings variances.
Just to clarify, the earnings variances noted by Hydro-Québec at the end of a fiscal year are due in large part to the company’s performance. In other words, Hydro-Québec is able to achieve better results than anticipated because of efficiency gains.
It is also important to note that the amounts associated with these earnings-variances do not remain in Hydro-Québec’s “coffers”. Rather, they are passed on to our customers, either directly or indirectly. 1. Directly: efficiency gains help limit Hydro-Québec’s rate increases, and this, in a recurring manner during subsequent rate years. 2. Indirectly: Hydro-Québec’s earnings are reflected in its net earnings, of which 75% are remitted to the company’s sole shareholder, the Québec government. In 2014, the Régie de l’énergie authorized Hydro-Québec to create an earnings-sharing mechanism.
However, in accordance with the Act mainly to implement certain provisions of the Budget Speech of 4 June 2014 and return to a balanced budget in 2016, tabled at the National Assembly in April 2015, this sharing mechanism has been suspended until Québec returns to a balanced budget. Therefore, Hydro-Québec is not keeping these amounts, but rather contributing towards achieving budget targets.