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Bill 25

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Energy Bulletin

The Bill respecting mainly the implementation of certain provisions of the Budget Speech of 20 November 2012 ("Bill 25") was introduced before the Québec National Assembly last February 21. This omnibus bill amends a number of acts, including the Act respecting the Régie de l'énergie, the Environment Quality Act and the Mining Act, to allow for the implementation of certain provisions of the Budget Speech of 20 November 2012.

Amendments to the Act respecting the Régie de l'énergie

The Act respecting the Régie de l'énergie is amended so as to provide for the establishment, by the Régie, of a performance-based regulation to ensure efficiency gains by Hydro-Québec, to provide that certain of Hydro-Québec's operating costs be fixed until the Régie's first performance-based regulation applies, and to provide that Hydro-Québec retains any excess amount arising from the difference between the set amount of the operating costs and the cost actually incurred. Section 25 of the Act respecting the Régie de l'énergie is also amended by adding a fourth paragraph that subjects this performance-based mechanism to the Régie's obligation to hold a public hearing.

These amendments to the Act respecting the Régie de l'énergie also contemplate the indexation of the average cost of heritage pool electricity, thus replacing provisions regarding increases of this cost.

As regards greenhouse gases, the Act respecting the Régie de l'énergie is amended in order to provide that the method of calculation of the annual duty payable into the Green Fund will not, as of the date on which Bill 25 comes into force, take into account greenhouse gas emissions generated by the combustion of natural gas and fuel, other than gasoline and diesel, sold after January 1, 2012 to a purchaser that is required to cover its CO2 emissions with greenhouse gas emission allowances. If sections 168 and 174, and the sixth paragraph of section 201 of Bill 25 are read jointly, we see that the Green Fund duty that is to be paid by any natural gas distributor, any legal person or any partnership that brings fuel into Québec for a purpose other than resale, and any distributor of fuel will be repealed on January 1, 2015. From January 1, 2015 on, these distributors will be subject to the cap-and-trade system ("CTS").

Amendments to the Environment Quality Act

The second paragraph of Section 46.8 is amended to provide for the publication of the list of issuers that received an allocation and the total number of emission units allocated without charge to all emitters in the Gazette officielle du Québec, and this after each allocation of emission units that is made without charge, henceforth excluding from that list the issuers that are required to cover their greenhouse gas emissions.

Section 46.11, which provided that the minister maintain a public register of emission allowances, is replaced by a new article that the minister may periodically publish summaries of emission allowance transactions or sales by auction or agreement and provide any other information respecting the cap-and-trade system, including a list of the emitters and other persons or municipalities registered in the system.

Section 46.13 is amended so that the minister or government may make the delegations provided for in section 4.2 concerning the implementation of any measure to reduce greenhouse gas emissions or to delegate all or part of the cap-and-trade system by agreement, and no longer necessarily just by means of regulation. However, notice of any delegation must be published in the Gazette officielle du Québec and state, among other things, the name of the delegate and the functions assigned to him. Section 176 of Bill 25 also provides that the Regulation respecting the delegation of management of certain parts of a cap-and-trade system for greenhouse gas emission allowances is deemed to be the notice required under section 46.13 of the Environment Quality Act.

Amendments to the Mining Act and its regulations

Amendments to the Mining Act strengthen the regulatory framework applicable to the search or exploration for petroleum, natural gas or underground reservoirs by subjecting new activities to the granting of licences and increasing the amount of fees to be paid.

For example, section 166 of the Mining Act is replaced by a new section providing that the minister may award a licence in respect of a territory at the time and under the conditions determined by the minister. Note that no licence may be awarded to a person who held a right relating to petroleum, natural gas or an underground reservoir that was subject to a revocation during the two years prior to the beginning of the awarding process. Also of interest, section 166.1 of the Mining Act relating to the tendering process is repealed.

Bill 25 also amends certain provisions relating to the setting of certain fees associated with licence applications under the Regulation respecting petroleum, natural gas and underground reservoirs, including:

  • Fees associated with applications for geophysical surveying licences rise from $50 to $1,000;
  • Fees associated with applications for well drilling licences will increase from $100 to  $4,300;
  • Fees associated with applications for well completion licences will go from $50 to $2,500;
  • Applications for well conversion licences will now be subject to payment of a $2,000 fee;
  • Well closing applications, provided for in section 59, are now subject to payment of a $2,000 fee for a temporary closure, and $2,600 for a permanent closure;
  • Applications for an exploration licence for petroleum, natural gas and an underground reservoir is henceforth subject to payment of a $3,000 fee;
  • Applications for production leases relating to petroleum and natural gas or an underground reservoir is now subject to payment of a $5,000.

These amendments to the regulatory framework that apply to mining activities are in addition to those made to the Regulation respecting mineral substances other than petroleum, natural gas and brine in the draft regulation published in the February 13, 2013 edition of the Gazette officielle du Québec, which provides that the financial guarantee given by mining corporations will go from 70% to 100% of the invoice for restoring the mines that they operate. This guarantee will henceforth cover the cost of work on the entire mining site, not just the tailings accumulation areas.

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