The Residential Dual-Energy Program of Hydro-Quebec: An Economic Analysis
Higher than expected electricity consumption in recent years and increasing objections to capacity expansion on environmental grounds have led Quebec's government owned electric utility, Hydro-Quebec, to launch an innovative program to reduce peak period residential electric heating demand. When the outside temperature drops below -12°C, customers who have opted for the program are charged 10¢/kWh for their electricity (substantially above the 4.46¢/kWh paid by normal residential customers) and they are automatically switched to a non-electric heating source, whereas above -12°C they pay 2.75¢/kWh for all uses. A cost-benefit analysis of this dual-energy program finds that if, as Hydro-Quebec forecasts, 150,000 residential customers were to opt for the program, they would benefit by $19.0 million per year, while the utility and government would lose $21.6 million and$1.6 million respectively, with a total net loss to Quebec society of $4.25 million a year.
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