Consultants for Hydro-Québec defend proposal to double energy costs for data centres

What is Hydro-Québec proposing to change for data centres, and why?

Hydro-Québec is proposing to more than double the average electricity rate for data centres using at least five megawatts. It says the change would prevent other customers from covering the growing cost of serving a rapidly expanding industry.

Eligible centres currently pay 6.82 cents per kilowatt-hour; the proposed average is 13 cents. Hydro-Québec says production costs average about 12 cents. Selling below cost could shift the burden to households and businesses.

Forecasts show North American data-centre demand rising 133% between 2024 and 2030. Growth is largely tied to artificial intelligence. Hydro-Québec says affected centres use 190 megawatts at peak today and could reach 1,000 megawatts by 2035. The regulator is reviewing the plan. It could make Quebec less attractive than Ontario, New Brunswick, and some US regions. However, it would remain cheaper than most nearby jurisdictions.

What is a data centre, and why do AI companies need so much electricity to operate one?

A data centre is a large facility packed with computers, storage systems, cooling equipment, and network connections. It stores information and performs digital tasks for businesses and AI companies. Training AI models requires many powerful computers to process enormous datasets repeatedly, creating heavy electricity demand.

In Quebec, Hydro-Québec says data centres currently use 190 megawatts during peak consumption. AI training centres can range from 20 megawatts to many thousands. Their computers turn electricity into calculations, while cooling systems remove the heat those calculations produce.

The scale is growing quickly. Dunsky analysts expect North American data-centre energy use to rise 133 percent between 2024 and 2030, largely because of AI. Hydro-Québec says affected facilities could reach 1,000 megawatts by 2035. That growth is driving proposed higher rates, so other customers do not subsidize their electricity use.

How large could data-centre electricity demand become, and how would the proposed rates change what operators pay?

Data-centre electricity demand in North America could rise 133% from 2024 to 2030, driven largely by artificial intelligence. That surge matters because utilities must secure more power without shifting rising costs onto ordinary customers.

In Quebec, Hydro-Québec says facilities covered by its proposal now use 190 megawatts at peak times and could reach 1,000 megawatts by 2035. The utility wants to raise their average price from 6.82 cents to 13 cents per kilowatt-hour, because production costs average about 12 cents and are increasing.

The higher rate would still leave Quebec cheaper than most nearby jurisdictions, though Ontario, New Brunswick, and some U.S. areas offer cheaper power. Operators would therefore pay nearly twice as much in Quebec, while the change aims to prevent other customers from subsidizing their consumption. The regulator is reviewing the proposal, and new rates could influence where future AI data centres locate.

What could happen to other electricity customers if Hydro-Québec continues selling power to data centres below its production cost?

If Hydro-Québec keeps charging large data centres less than electricity costs to produce, other customers could cover the shortfall. Their rates might rise, or they could indirectly subsidize a rapidly growing industry.

For example, data centres currently pay an average 6.82 cents per kilowatt-hour, while production costs about 12 cents. That gap means Hydro-Québec earns less than it spends, potentially shifting costs onto households and businesses. Its proposed 13-cent rate would cover the stated production cost, though the regulator must decide.

The stakes could grow quickly. Covered data centres use 190 megawatts at peak demand today and could reach 1,000 megawatts by 2035. Consultants expect North American data-centre demand to rise 133 percent by 2030, largely through AI. If Quebec keeps discounted rates, the larger gap could pressure other customers’ bills.

Why is Hydro-Québec's near-monopoly in Quebec important when comparing its rates with those in Ontario, New Brunswick, and the United States?

Hydro-Québec’s near-monopoly matters because Quebec data centres cannot freely choose another electricity supplier. In Ontario, New Brunswick, or the United States, prices may reflect different suppliers, markets, regulations, and power costs. Therefore, a simple rate comparison may not show the full deal available to a data-centre operator.

For example, Dunsky says the proposed Quebec rate would average 13 cents per kilowatt-hour, versus 6.82 cents today. That increase aims to prevent other Quebec customers from subsidizing data centres, since production costs average about 12 cents. But operators can compare Quebec’s mandatory utility rate with alternatives elsewhere, including cheaper energy in Ontario and New Brunswick.

The comparison still matters for investment decisions, but industry lawyers said the jurisdictions are not fully comparable. Quebec’s regulator is reviewing the proposal, while Hydro-Québec remains the dominant supplier. Data-centre demand could rise from 190 megawatts at peak consumption to 1,000 megawatts by 2035. If rates rise, Quebec may protect other customers from the costs, but some projects could choose competing jurisdictions.

What alternatives do data centres have if electricity becomes more expensive in Quebec?

Data centres facing higher Quebec electricity prices could seek cheaper power elsewhere. The study names Ontario, New Brunswick, and parts of the United States as alternatives. Moving operations or locating new facilities there could lower electricity costs, although the article does not detail relocation costs or other trade-offs.

In Quebec, Hydro-Québec’s proposed average rate is 13 cents per kilowatt-hour for facilities using at least five megawatts. That compares with 6.82 cents today, while Ontario and New Brunswick could offer cheaper energy. Quebec’s electricity system also has a monopoly supplier, limiting local bargaining options.

Therefore, operators can compare locations, but leaving Quebec is the clearest alternative described. Hydro-Québec says production costs average around 12 cents and are rising. Even after the increase, its power would remain cheaper than most neighbouring jurisdictions, though not all. That may keep Quebec attractive for some projects, while price-sensitive expansions could move elsewhere.

Key Facts:

📌 Rates could rise from 6.82 to 13 cents per kilowatt-hour.

📌 Data-centre demand may increase 133% between 2024 and 2030.

📌 Peak usage could grow from 190 MW to 1,000 MW by 2035.

📌 AI data centres can range from 20 megawatts to many thousands.

📌 North American data-centre energy use could rise 133% by 2030.

📌 Quebec data centres may reach 1,000 megawatts by 2035.

📌 North American data-centre demand could rise 133% between 2024 and 2030.