18OCT

Quebec data centres face under-use fee

3 min read

13:11UTC

Hydro-Québec's proposed data-centre tariff, heard by Quebec's energy regulator from 1 to 9 October, would charge sites that use too little of their contracted demand as well as those that ramp up too fast.

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IndustryAssessed

Key takeaway

Hydro-Québec wants Quebec data centres to pay for contracted power they leave unused.

A data centre in Quebec whose peak demand stays below 60% of its contracted forecast for 12 months would pay a premium of C$92.28 a kilowatt on the gap between that peak and the 60% mark, under the proposed tariff of Hydro-Québec, the province's state-owned utility⁠¹. The Régie de l'énergie du Québec, the province's energy regulator, heard the case in public from 1 to 9 October, across six volumes of transcript in case R-4333-2026⁠².

The proposed Tarif CD covers any data centre that commits to at least 5,000 kilowatts (5 MW), at C$32.70 a kilowatt of billed demand each month plus 8.71 cents a kilowatt-hour⁠³. For a 100 MW site running flat out, that comes to about C$9.6m a month, roughly 13 cents a kilowatt-hour. Power drawn in hours above 110% of a site's agreed ramp-up carries a 17.42-cent surcharge on top of the 8.71-cent rate, tripling the price of energy in those hours.

The under-use premium follows the same take-or-pay logic Malaysia's minister set out on 15 October: a developer that books more than it needs pays for the difference. Ontario is heading the same way: in August it opened consultation on a data-centre playbook built on full energy-cost recovery and no cash incentives. A ruling is unlikely before 2027, because Hydro-Québec's filing points to further sessions on 7 to 11 and 15 to 18 December. A joint intervener for large industrial consumers filed its own wording on 7 October for tariff article 5.52, the clause that defines which customers the rate covers.

Deep Analysis

In plain English

Hydro-Québec is the state-owned power company in Quebec, Canada. It sells electricity cheaply because most of it comes from large dams. It has proposed a special price list for data centres. They would pay for the peak power they need each month, plus a charge for the energy they use. If a data centre uses far less than it promised, it pays a penalty, because the company had to plan supply for it. The Régie de l'énergie, Quebec's energy regulator, must approve the plan first.

Deep Analysis

Root Causes

Since 2023 Quebec law has required ministerial approval before Hydro-Québec supplies a new load of 5 MW or more. The 5,000 kW floor in Tarif CD matches that threshold, so the tariff prices loads the government has already chosen to admit.

Hydro-Québec's surplus has shrunk as export contracts to New England and New York and domestic electrification claim more output. New supply from wind and new dams costs far more than the heritage pool, so a cheap flat tariff for data centres would transfer that cost to other customers.

Ramp-up forecasts are the weak point of any large-load contract. A site that over-forecasts makes the utility build or buy supply that sits idle, which is the risk the under-use premium targets.

What could happen next?

Consequence
Developers without signed tenants face higher risk of paying for unused capacity in Quebec.
Medium term · Assessed
Precedent
A penalty for under-use alongside a surcharge for over-use may become a template for other hydro-rich grids.
Long term · Suggested
Risk
Industrial interveners may narrow the definition in article 5.52, changing which customers the rate covers.
Short term · Reported

Source Landscape

This story draws on neutral-leaning sources

Primary parallel: In 2018 and 2019 Hydro-Québec and the Régie de l'énergie dealt with a rush of cryptocurrency miners by creating a dedicated block of power for the sector, allocated through a call for tenders. Quebec then wrote a separate rate category so the newcomers' costs and risks stayed off other customers.

Counter-parallel: Chelan County PUD in Washington State froze new cryptocurrency-mining connections in 2018, then wrote a high-density load rate. Chelan stopped first and priced later, where Quebec is pricing before demand forces a freeze.

The 17.42-cent surcharge is exactly twice the 8.71-cent base energy rate, so the price signal in over-ramp hours is set to make running ahead of the agreed schedule uneconomic. The under-use premium of C$92.28 a kilowatt equals close to three months of the C$32.70 monthly demand charge.

Structurally, the tariff turns Hydro-Québec's supply risk into a contractual obligation for the customer. That favours operators with signed tenants and predictable load, and penalises developers who reserve capacity first and seek tenants later.

Consensus view: Ontario and Quebec are both moving to make data centres carry their full cost. Ontario's Data Centre Playbook consultation proposed full energy-cost recovery above 1 MW with no cash incentives, and Hydro-Québec's Tarif CD applies the same principle through a separate rate class that leaves other customers' rates untouched.

Counter-view: Quebec's cheap power rests on the heritage electricity pool, 165 TWh a year that Hydro-Québec must supply at a fixed price set in law. Rate design matters less than allocation there, because every terawatt-hour sold to a data centre beyond that pool must come from new, costlier supply, which the tariff prices only indirectly.

Key tension: Whether the under-use premium deters over-forecasting, or simply becomes a cost large tenants accept to hold a reservation in a province where new allocations are scarce.

Sources:Régie de l'énergie du Québec·Hydro-Québec

Mentions:Régie de l'énergie du Québec →Hydro-Québec →Tarif CD →AQCIE-CIFQ →Quebec →Ontario →Malaysia →Canada →Washington →Washington (state) →New York State →

First Reported In

Update #16 · Malaysia bills data centres for idle grid

Régie de l'énergie du Québec· 18 Oct 2026

Read original →

Different Perspectives

Nexus Core Systems

Hired FiveNines Group, in a deal announced on 8 October, for early design, feasibility and permit work on a 20 MW AI data centre near Casablanca. It is the first named site of a planned 180 MW programme, still at concept design.

MC Digital Realty

Began building the 24 MW KIX15 data centre in Osaka Prefecture on 7 October, due to open in the fourth quarter of 2028. The joint venture of Digital Realty and Mitsubishi Corporation says it will then run 10 data centres in Japan with about 220 MW of IT capacity.

KT Cloud

Said on 7 October that it and Hyundai Engineering will build a 50 MW AI data centre at Cheongna, Incheon, from the fourth quarter of 2026. Completion is due in the first quarter of 2030, part of KT Cloud's target of more than 1 GW of AI capacity by 2031.

Town of Trebbin

Said on 7 October that work has begun on two data-centre buildings and a substation under building permits already granted. The operating permit under the Federal Immission Control Act is still with Brandenburg's environment agency, so the town postponed its public presentation.

Óscar López, Digital Transformation minister

Said in Madrid on 8 October that he hopes to approve the data-centre royal decree shortly, with urgent processing to reach the cabinet before the 29 November election. He said the final text will take the more than 600 submissions into account, without saying what changes.

Hydro-Québec

Defended its proposed Tarif CD before the Régie de l'énergie du Québec from 1 to 9 October, a rate for data centres of 5 MW or more that adds a premium when peak demand stays below 60% of forecast. Industrial consumers filed their own wording for the clause on who the rate covers.

Written with AI from Lowdown's published reporting. Not individually reviewed by an editor. Editorial standards.