Rates, Conditions of Service and General information

1 - Does Hydro‑Quebec provide leasing services or sell generator for medium-voltage electricity?

No.

2 - Does an application have to identify a specific location where the electricity will be used?

Yes, as mentioned in section 3 of the Tender Form [PDF 267 kB], the bidder must provide an outline of the project, including the location of the site.

3 - What information should be included on the Tender Form where it asks "Number of addenda received"?

It is the number of addenda posted on the Hydro‑Québec website:

https://www.hydroquebec.com/blockchain/selection-process/documentation.html

4 - Is the request for proposals only open to facilities in Quebec?

Yes.

5 - We are already a connected customer since December 2017 with a 400 AMP service line. We have already invested heavily in our infrastructure and are prepared for an additional 400 AMPs. How does this affect our bid and will a new contract completely replace our existing one?

A customer whose contract is an existing contract, as defined in the Rates and Conditions of Service for cryptographic use applied to blockchains [PDF 121 kB], must participate to the request for proposals for any load increase beyond the load already installed or authorized.

6 - With reference to page 51-53 of Annex 9: Can the bidder submit for a specific tariff in the bidder (e.g. Tariff M or Tariff L?) Or the application of the electricity tariff is imposed by Hydro‑Quebec based on evaluation of the bidder capacity?

No. The applicable rate depends on the power demand of the customer. The terms and conditions of the rates are specified in the Electricity Rates [PDF 4.82 MB], chapter 4, section 1 (Rate M) and chapter 5, section 2 (Rate LG). Hydro‑Québec mentions that Rate L only applies to an industrial activity, which does not include cryptographic use applied to blockchains.

7 - What are the locations eligible for use high-voltage electricity power? Can the bidder request Hydro‑Quebec to verify in advance that its intended location for the project is eligible for use of high-voltage electricity power?

As part of the request for proposals process, Hydro‑Québec does not make available precise locations where capacity is available for either type of supply, high-voltage or medium-voltage electricity supply.

8 - What are the locations eligible for use medium-voltage electricity power? Can the bidder request Hydro‑Quebec to verify in advance that its intended location for the project is eligible for use of medium-voltage electricity power?

As part of the request for proposals process, Hydro‑Québec does not make available precise locations where capacity is available for either type of supply, high-voltage or medium-voltage electricity supply.

9 - What are the required licenses for the bidder to build and connect to the electrical and to connect to the electricity grid of Hydro‑Quebec? Or Hydro‑Quebec will build and connect the bidder’s cryptocurrency mining system directly to the electrical grid?

As indicated in article 1.6 of the Request for Proposals Document [PDF 291 kB], all work will be carried out by Hydro‑Québec.

10 - With reference to page 51 of the Tender Form, does the total investment capital includes all management cost for a period of 5 years? Or a longer/shorter period?

As mentioned in note 3 at section 4.1.3 of the Tender Form [PDF 267 kB], investments are limited to the acquisition of goods and equipment manufactured in Quebec. This undertaking corresponds to the capital investment that the customer commits to making by the beginning of its electrical installation’s operating period, at the conclusion of its scaling, if applicable.

11 - Ref Annex 5 - Can the individual bidder submit a bank guarantee issued under the requested of a Canadian enterprise (because an individual bidder is not permitted to request to issue a bank guarantee at a Canadian bank)?

Yes, the “Applicant” who submit the letter of credit [PDF 35.9 kB] may be different from the “Customer”. Here is below (between brackets) the wording when the Applicant is different from the Customer.

At the request of (name of Applicant if different from the customer) (the “Applicant”), on behalf of (customer’s name) (the “Customer”), whose head office is located at (customer’s address), we, (name and address of issuing financial institution) are establishing for your benefit our irrevocable and unconditional standby letter of credit (the “Letter of Credit”) for an amount not exceeding (amount in words) Canadian dollars $ (amount in figures) CAD (the “Guaranteed Amount”).

Independently of the “Applicant” who submit the letter of credit, it is important that the “Customer” is exactly the same company who will sign the agreement with Hydro‑Québec.

Finally, one must remind that the bid bond must be in the form of a letter of credit or a certified cheque as indicated at article 2.3.1 of the Request for Proposals Document [PDF 291 kB].

12 - Ref Art 3.2 RFP - What information should the investor include in the business plan?

The bidders must submit the Tender Form [PDF 148 kB] containing all information and documents required in accordance with the Request for Proposals Document [PDF 291 kB]. The business plan is not a requirement to participate in this request for proposals.

13 - Would it be possible to get a copy of results from the third party survey you conducted with block chain companies in Summer 2018?

This information is publicly available on the Régie de l’énergie Web site, at this address (in French only).

14 - Our question is related to section 4.2.2 of the Tender Form: When does the signed and sealed report from an independent engineer need to be submitted? With the submission of the Tender Form or at a later time?

The signed and sealed report from an engineer needs to be submitted with the submission of the tender form.

15 - Who can be a director of a cryptomining company in Quebec? What are other requirements for such company?

This question is not related to this request for proposals, nor the responsibility of Hydro-Québec.

16 - If a contract has not yet been signed with a user of the recovered energy, how detailed must the letter of intent? Must the letter of intent have the details required in a contract with a user of  energy?

Hydro–Québec has published an Addendum 4  [PDF 2,9 MB] to the request for proposals documents, which contains more details regarding information required under section 4.2.1 of the Tender Form [PDF 148 kB]. More specifically, a letter of intent must contain the same information as a contract. That information is detailed under points a, b and c at the end of section 4.2.1.

17 - Will the increased load resulting from the implementation of crypto mining activities on an industrial site with a Rate L supply contract be taken into account in the calculation regarding the Electricity Discount Program for Rate L Customers?

No, cryptographic use applied to blockchains can in no way be taken into account in Electricity Discount Program for Rate L Customers calculations because this non-industrial use is not eligible. Moreover, if the power associated with cryptographic use applied to blockchains exceeds 50 kW, the contract will no longer be eligible for Rate L and the rate for cryptographic use applied to blockchains will apply to the entire load. To maintain Rate L for large-power industrial activities, the associated loads will have to be covered by a separate contract.

18 - Is an industrial customer with Rate L who installs crypto mining equipment eligible for Rate L if the equipment is connected to the  interconnection?

If the power associated with cryptographic use applied to blockchains exceeds 50 kW, the contract will no longer be eligible for Rate L and the customer’s entire consumption, regardless of its use, will be billed at the rate applicable to cryptographic use applied to blockchains.

19 - I would like to know what the disincentive rate is. Is it the amount added at all times to the regular rate (G or M)? My business is a startup that would like to start hosting blockchain machines. Would startups be able to a proposal?

The disincentive rate is defined in articles 8 and 9 of the Rates and Conditions of Service for Cryptographic Use Applied to Blockchains.

The disincentive rate is Rate M or Rate LG, as applicable, but the energy is billed at the price of 15¢/kWh. It applies to all unauthorized consumption for cryptographic use applied to blockchains.

Moreover, all interested parties able to meet the requirements of the request for proposals may submit a proposal.

20 - What is the average price per kWh? Are the conditions the same as for Rate M – business?

The details of the rates applicable to cryptographic use applied to blockchains are described in Rates and Conditions of Service for Cryptographic Use Applied to Blockchains.

For a medium-power contract, the price of energy is the price set for Rate M, namely 5.03¢/kWh for the first 210,000 kilowatthours a month, and 3.73¢/kWh for the remainder of the power consumption, but only if the contract was an “existing contract” as of June 18, 2018 or if it was selected further to the request for proposals. Any unauthorized consumption for this use will be billed at the price of 15¢/kWh. The price of the billing demand remains $14.58/kW in all cases.

21 - Does Hydro Quebec provide leasing services or sell generators for medium‑voltage electricity?

No

22 - I would like to confirm the cost of electricity. According to my calculations, I would be charged at Rate M ($0.05/kWh) plus the $14.50/kW power rate for my project (192 kW). That works out to $0.07/ + taxes. Do my calculations seem correct?

In addition to the applicable rate, the unit price paid by a customer depends primarily on its consumption profile, or the amount of energy consumed for a given power demand. In regard to the components of the Rate M price on April 1, 2019, Hydro-Québec refers you to its Web–site:

http://www.hydroquebec.com/business/customer-space/rates/rate-m-general-rate-medium-power-customers.html

Based on the parameters provided, a unit price of approximately 7 ¢/kWh appears correct, provided the load factor is higher than 85%. Hydro-Québec reminds you, however, that the final rates for cryptographic use applied to blockchains remain subject to the Régie de  approval.

23 - Once the Hydro-Québec request for proposals is finished, will it be possible to request a multi-MW connection for crypto mining use? What will happen when the request for proposals is over? Will all connection requests for this type of activity be rejected?

Once the request for proposals is over, connection requests for this type of load will not be rejected. These requests and the associated contracts will be processed in keeping with the document Rates and Conditions of Service for Cryptographic Use Applied to Blockchains.

For customers whose proposals are not selected in the RFP process, the disincentive rate (Article 8) applies. In regard to existing contracts (articles 5 and 6) and customers selected further to the request for proposals (Article 7), the disincentive rate applies if any installed capacity is (Article 9).

24 - If an industrial customer with Rate L installs a crypto-mining site in a facility with distinct metering dedicated to crypto mining and a distinct contract, can it use the same connection point for both uses? With distinct metering for crypto mining in place, the consumption for each type of use can be determined accurately.

The electrical installation is defined in Annex I – Definitions of the Request for Proposals Document as “any electrical equipment, which includes any generating equipment connected and operated in parallel to the power distribution system, and any customer substation to which Hydro-Québec supplies or is to supply electricity and which is located on the load side of the connection point. The electrical installation includes the customer’s service entrance.” The same connection point can therefore be used, provided that, on the load side, there is a distinct customer connection, distinct metering and a distinct contract covering cryptographic use applied to blockchains. The electrical installation must also meet current standards, particularly standard E.21-10 (Blue Book).

25 - If my master electrician submits a request for a connection on my property for cryptocurrency purposes, do we have to apply under this request for proposals or can we submit a traditional connection request without going through this request for proposals?

All connection requests addressed to Hydro-Québec for cryptographic use applied to blockchains must be submitted in response to the request for proposals. Only applications submitted in this manner will be reviewed and receive response.

Following the request for proposals, connection requests and the associated contracts will be processed in keeping with the conditions set out in Rates and Conditions of Service for Cryptographic Use Applied to Blockchains.

For participants whose bid has not been accepted following the request for proposals process and who wish to maintain their request, and for customers who may not have submitted a bid, the disincentive rate (Article 8) applies, along with all conditions of service governing this type use.

26 - We are a group of investors who want to start a mining firm. We would like a complete description of the steps we have to take involving Hydro-Québec in developing project.

Hydro‑Québec invites you to view the Web site dedicated to the request for proposals, where you can find all the relevant information documents.

27 - Do we absolutely have to be a duly registered bidder to carry out our project?

All connection requests addressed to Hydro-Québec for cryptographic use applied to blockchains must be submitted in response to the request for proposals. Only applications submitted in this manner will be reviewed and receive a response.

Following the request for proposals, connection requests and the associated contracts will be processed in keeping with the conditions set out in Rates and Conditions of Service for Cryptographic Use Applied to Blockchains.

For participants whose bid has not been accepted following the request for proposals process and who wish to maintain their request, and for customers who may not have submitted a bid, the disincentive rate (Article 8) applies, along with all conditions of service governing this type of use.

28 - Would it be possible to get a copy of the results from the third-party survey you conducted with block chain companies in summer 2018?

This information is publicly available on the Régie de l’énergie Web site, here (in French only).

29 - Who can be a director of a crypto-mining company in Québec? What other requirements apply for this type company?

This question is not related to this request for proposals and is not the responsibility of Hydro‑Québec.

RFP Process

1 - Does a bid have to identify a specific location where the electricity will be used?

Yes, as mentioned in Section 3 of the Tender Form , the bidder must provide an outline of the project, including the location of the site.

2 - What information should be entered in the Tender Form where it asks "Number of addenda received," in section 1.1?

This refers to the number of addenda posted on Hydro-Québec’s Web site:

https://www.hydroquebec.com/blockchain/selection-process/documentation.html

3 - Is the request for proposals open only to electrical installations in Québec?

Yes

4 - Is it possible to enter into an agreement involving a term of less than 5 years, for instance, one with a monthly or annual term?

No. Article 1.4.1 of the Request for Proposals Document stipulates that the bidder must undertake to consume electricity for every contract year and for a period of five consecutive years following the date on which service is established.

In the event of a difference between the quantities of electricity requested in Section 2.1.1 of the Tender Form (Annex 4) and those actually consumed, Hydro-Québec will apply the terms for failure to fulfill the consumption undertaking outlined in Article 1.5.1. of the Request for Proposals Document.

5 - Is a financial guarantee required upon reaching an agreement and signing the contract?

The financial guarantees to be provided by a selected bidder upon signing the contract are set out in Article 4.18 of the Request for Proposals Document.

You can also refer to the Standard Draft-Design Agreement (Annex 6) and the Standard Connection Agreement (Annex 7).

6 - Why were the deadlines indicated in the request for proposals postponed by two months?

The reasons behind the postponement were presented to the Régie de l’énergie and can be found at the following address:

publicsde.regie-energie.qc.ca/projets/457/DocPrj/R-4045-2018-B-0144-Audi-Dec-2019_08_14.pdf

7 - In section 2.1.1 of the Tender Form (Annex 4), should the load factor (LF) calculation include or exclude the 300 uninterruptible hours?

The contract LF represents the load factor anticipated by the customer for its use of its contract power over a contract year. It must not take account of any energy not delivered during interruption periods. In other words, it must be calculated as if there were no interruption period. Moreover, as indicated in section 1.5.1 of the Request for Proposals Document, Hydro Québec will add energy not delivered during a curtailment period to the real energy consumed to calculate the amount to be paid for failure to fulfill the consumption undertaking, as applicable, since the consumption undertaking is based on a contract LF that excludes any interruption period

The terms in italics are defined in Annex I – Definitions of the Request for Proposals Document

8 - If the design report for the recovered energy reclamation process is not available at the time of the bid, is it possible to propose a concept that will be better defined at a later date?

As indicated in section 4.2.2 of the Tender Form and if applicable to its project, the bidder must enclose with its bid a design report on the recovered energy exploitation process. In particular, the bidder must fill out and submit with its design report Table 4.2 – Estimated Energy Balance Profile for a Contract Year. The values entered in Table 4.2 are used to determine the bidder’s environmental undertaking, as described in Article 1.4.3 of the Request for Proposals Document. The bidder’s environmental undertaking will be considered in step 2 of the bid evaluation process, pursuant to Article 3.3.2 of the Request for Proposals Document.

The environmental undertaking of a bidder selected at the completion of the selection process will be reproduced in its connection agreement. In this regard, see Article 11 of the Standard Connection Agreement.

Submitting the design report for the recovered energy exploitation process with the bid is a prerequisite for obtaining points in relation to the bidder’s environmental undertaking. After the bid submission deadline, the bidder may file a revised design report in order to add a degree of precision. However, the revised report cannot be used to amend the value of its environmental undertaking.

9 - Does Section 4.2 still have to be filled out even though we do not recover any heat except from other building tenants, but no steps have taken?

As indicated in Section 4.2 of the Tender Form, if the energy savings ratio is less than 7.5%, the bidder does not have to provide information for section.

10 - We are already a connected customer since December 2017 with a 400-amp service line. We have already invested heavily in our infrastructure and are prepared for an additional 400 amps. How does this affect our bid, and will a new contract completely replace existing one?

A customer with an existing contract, as defined in the Rates and Conditions of Service for Cryptographic Use Applied to Blockchains, must participate in the request for proposals for any load increase beyond the load already installed or authorized.

11 - Since we are already in production and integrated into the Hydro-Québec grid as a self-generator for cryptographic use and a Rate G consumer, how do Request for Proposals A/P-2019-01 and Rate M apply to our situation?

This contract is not considered an existing contract, as defined in Section 5 of Annex 8 of Rates and Conditions of Service for Cryptographic Use Applied to Blockchains. If you wish to use the power supplied by Hydro-Québec to supply over 50 kW for this type of use, you will have to take part in the request for proposals to obtain a block of power dedicated to cryptographic use applied to blockchains.

Moreover, if your bid is selected upon completion of the RFP process, your contract will no longer be eligible for Rate G and will become subject to the rate applicable to cryptographic use applied to blockchains. Depending on the quantity indicated, current rates M or LG, as applicable, will apply.

If your project is not selected further to the RFP process or if you decide not to participate and you nevertheless increase the power associated with your contract for cryptographic use applied to blockchains in excess of 50 kW, all this power will be billed at 15¢/kWh pursuant to Article 8 of Rates and Conditions of Service for Cryptographic Use Applied to Blockchains, or at any other rate applicable at that time in accordance with the provisions approved by the Régie.

12 - Since we are already integrated into the Hydro-Québec grid and operating under the self-generation program without compensation, how should the contract power and load factor (LF) be determined in light of the framework presented in Request for Proposals A/P-2019-01 documents to ensure they meet our needs regarding the operation of our blockchain cryptography computers and application of Rate M? A related question: Will we be able to increase the contract power or decrease the LF at a later date if they are not appropriate for our needs?

The power is the maximum power that Hydro-Québec will have to provide annually to supply your loads. The load factor (LF) must be estimated on the basis of the annual energy that Hydro Québec will have to provide. If a significant portion of the load is supplied by your own facilities, the LF may be fairly low.

Hydro-Québec notes that the power and LF indicated are used to determine the consumption undertaking, as set out in Section 2.1 of the Tender Form. In the event of failure to fulfill the consumption undertaking, the provisions of Section 7.3 of the Connection Agreement apply.

The bidder may not revise the terms of the agreement during the five-year term. However, as indicated in Section 7.4 of the Connection Agreement, Hydro-Québec may revise the contract power in accordance with Section 15.2.2 of the Condition of Service..

13 - Is the operation of our power plant for cryptographic purposes under Hydro-Québec’s self-generation without compensation program, supplemented by the purchase of additional electricity from Hydro-Québec, consistent with the diversification target for projects under 5 MW advocated by the regulator for application of Rate M?

In its decision D-2019-052, the Régie asks for a minimum of 50 MW to be reserved for projects of 5 MW or less. If a project’s contract power is equal to or less than this 5-MW ceiling, it qualifies for this reserved block.

14 - In reference to pages 51 to 53 of Annex 9: Can a bidder propose a specific rate in its bid (for example, Rate M or Rate L)? Or is the applicable rate imposed by Hydro-Québec based on the power indicated in the bid?

No. The applicable rate depends on the customer’s power demand. The terms and conditions applicable to rates are specified in Electricity Rates, chapter 4, section 1 (for Rate M) and chapter 5, section 2 (for Rate LG). Note that Rate L applies only to industrial activity, which does not include cryptographic use applied to blockchains.

15 - What locations are eligible for the use of high-voltage electricity power? Can the bidder ask Hydro Quebec to verify in advance that its intended location for the project is eligible for the use of high-voltage electricity power?

As part of the request for proposals process, Hydro-Québec does not provide any information regarding available capacity for specific locations, either for high-voltage or medium-voltage supply.

16 - What locations are eligible for the use of medium-voltage electricity power? Can the bidder ask Hydro Quebec to verify in advance that its intended location for the project is eligible for the use of medium-voltage electricity power?

As part of the request for proposals process, Hydro-Québec does not provide any information regarding available capacity for specific locations, either for high-voltage or medium-voltage supply.

17 - What licenses does the bidder require to build electrical installations and connect them to the Hydro-Québec grid? Or will Hydro-Québec connect the bidder’s cryptocurrency mining system directly to its electrical grid?

As indicated in Article 1.6 of the Request for Proposals Document, all connection work will be carried out by Hydro‑Québec.

18 - In reference to page 51 of the Tender Form, does the total investment capital include all management costs for a five-year period, or for a longer/shorter period?

As mentioned in note 3 in section 4.1.3 of the Tender Form, investments are limited to the acquisition of goods and equipment manufactured in Quebec. This undertaking corresponds to the capital investments that the customer commits to making by the beginning of its electrical installation’s operating period, at the conclusion of its scaling, if applicable.

19 - In reference to Annex 5, can the individual bidder submit a bank guarantee issued at the request of a Canadian enterprise (because an individual bidder is not permitted to ask a Canadian bank to issue a bank guarantee)?

Yes, the “applicant” who submits the letter of credit may be different from the “customer.” The wording of the first sentence of the standard letter of credit should be as follows (modifications in red) when the applicant is different from the customer.

At the request of (Applicant’s name) (the “Applicant”), on behalf of (the “Customer”), whose head office is located at (Customer’s address), we, (name and address of issuing financial institution), are establishing for your benefit our irrevocable and unconditional standby letter of credit (the “Letter of credit”) for an amount not exceeding (amount in words) Canadian dollars ($ (amount in figures) CAD) (the “Guaranteed Amount”).

Regardless of the “applicant” for the letter of credit, it is important that the “customer” is exactly the same company as will sign the agreement with Hydro-Québec.

Finally, the bid bond must take the form of a letter of credit or a certified cheque, as indicated in Article 2.3.1 of the Request for Proposals Document.

20 - In reference to Article 3.2 of the Request for Proposals Document, what information should the investor include in the business plan?

The bidders must submit the Tender Form containing all the information and documents required in accordance with the Request for Proposals Document. The business plan is not a requirement to participate in this request for proposals.

21 - In reference to Annex 5 – Irrevocable and Unconditional Standby Letter of Credit, we would like to know the amount of the guarantee required for our 192-kW project. Article 2.1 [sic] of the Request for Proposals Document indicates $10/kW based on the contract power. Does this mean that we must plan on $10/kW × 192 kW × 365 days = $700,800, or on $1,920? I would like a clarification, please.

As indicated in Article 2.3 of the Request for Proposals Document, the bidder must enclose with its bid at the time of submission a bid bond in the amount of $10/kW based on the contract power, defined in Annex 1 as “the quantity of power to be installed, as requested by the bidder and presented in its bid, expressed in kilowatts (kW).”

For a project with a contract power of 192 kW, the bidder must include with its bid a bid bond of $1,920.

22 - Reference: Article 1.6 of the Request for Proposals Document and Annex 7 – Standard Connection Agreement.

In 20XX, we signed a connection agreement for the integration of a mini power plant into the Hydro-Québec grid. A great deal of the work has been done, but the power plant was not built. Could we use the dedicated line between our property and the Hydro-Québec substation to receive a new supply of XX MW, as a supplement to the mini power plant’s output, to supply a cryptographic mining project? If not, what is the maximum power that could be transmitted over this line?

As indicated in the Summary of Selection Process, a parametric estimate of the costs associated with each project selected in step 3 will be provided to bidders. It is at this step that Hydro-Québec will be able to indicate whether there are costs associated with a specific project. Out of fairness to all bidders, no information regarding the load capacity of a specific site can be provided by Hydro-Québec for the purpose of preparing bids.

23 - My bank tells me that it takes five weeks to obtain a letter of credit. Could we provide a bank draft made out to Hydro-Québec if we cannot obtain a letter of credit by the deadline?

Bank drafts are not accepted. However, certified cheques are.

24 - In relation to Section 4.2.2 of the Tender Form, when does the signed and sealed report from an independent engineer need to be submitted? With the submission of the Tender Form or at a later time?

The signed and sealed report from an engineer must be submitted along with the bid.

25 - Can the remaining balance of a sum deposited by a customer for a connection request in relation to which the project has been suspended be used to cover the bid bond called for in Article 2.3 of the Request for Proposals Document?

No, a sum deposited by the customer for a connection request filed with Hydro-Québec TransÉnergie cannot be used as a bid bond in connection with the request for proposals put out by Hydro‑Québec Distribution.

The bidder must enclose with its bid, at the time of submission, a bid bond of $10/kW based on the contract power, as required in Article 2.3 of the Request for Proposals Document.

In regard to the remaining balance of the sum deposited in relation to its connection request, the customer must contact Hydro‑Québec TransÉnergie.

26 - Our original agreement signed in Sept 2017 was for a 600 AMP 347/600 V connection. Are we not still entitled to that amount? Our current connection is 400AMPs.

A letter confirming the load associated to each of the existing contracts, as defined in the Rates and Conditions of Service for Cryptographic Use Applied to Blockchains, has been sent in mid-October 2019 to customers holding these contracts.

Holders of an existing contract wishing to participate to the request for proposals must enter, at section 2.1.1 of the Tender Form, the existing contract power. The proposal covers the contract power beyond this existing contract power.

(The terms indicated in italics are defined in Appendix 1 – Definitions.)