Hydro-Québec asks provincial regulator to hike energy rates for large data centres

A Hydro-Québec proposal that could double the cost of energy for data centres is being put to the test at a public hearing.

The hearing in Montreal will pit tech industry actors like Google GOOGL-Q against the provincial utility.

Hydro-Québec is asking the Régie de l’énergie, the provincial energy regulator, to consider a new electricity rate for data centres that require a capacity of over five megawatts.

The proposal would raise energy prices to an average of 13 cents per kilowatt hour.

The utility says this is around twice as much as what data centres pay as large‑power customers.

The hearing is scheduled to last until Oct. 9 and will involve actors from several industries, including the Canadian Federation of Independent Business.

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Hydro-Québec says that higher rates for the sector could limit the impacts of growing data-centre energy demand on residential rates.

Energy costs for data centres in Quebec are currently around six cents per kWh, which is much lower than in most other jurisdictions, said energy analyst Jean-François Blain.

“It creates an exceptional draw that benefits Quebec, as long as they can supply those companies,” he said.

With energy demand and costs increasing, Blain said Hydro-Québec might not be able to afford giving data centres the same advantageous price for long. The new rate would bring their rates closer to those of other areas.

Hydro-Québec said data centres that would be subject to the new rate currently consume 190 MW at peak consumption and could reach 1,000 MW by 2035.

The provincial energy regulator will be reviewing whether a new rate for data centres is fair and sustainable.