Newfoundland and Labrador Hydro’s president and CEO, Jennifer Williams, emphasized that the newly established memorandum of understanding regarding Churchill River power does not pave the way for contracts similar to the controversial 1969 power purchase deal signed by the Churchill Falls (Labrador) Corporation (CFLCo). Williams expressed confidence in the current agreement during an interview with CBC’s Carolyn Stokes.
The 1969 contract, still in effect today, secured low power rates for Hydro-Québec as the buyer for many years, providing minimal benefits to the seller CFLCo when electricity prices surged. In contrast, the recent three-way MOU involving the province’s utilities and jointly-owned CFLCo, unveiled on August 17, outlines the framework for a potential new sales contract, along with significant capital projects and power sales linked to the river.
The announcement of this agreement was celebrated by Prime Minister Mark Carney, former Quebec premier Christine Fréchette, now a Coalition Avenir Québec candidate, and N.L. Premier Tony Wakeham. Carney hailed the text as “the biggest green energy initiative in North American history.”
Williams clarified that electricity generated at the Churchill Falls power plant will not be sold at a fixed rate, despite the term “fixed rate” being used in public discussions. The proposed 50-year sales contract for Churchill Falls power will see the price charged to Hydro-Québec increase to 11.5 cents per kilowatt-hour by 2041, with an average annual escalation of 14 percent until then, followed by adjustments tied to the Consumer Price Index.
Under the new arrangement, Newfoundland and Labrador will maximize power sales to Quebec at a premium, significantly raising the price compared to the existing contract under which Hydro-Québec pays only 0.2 cents per kilowatt-hour until 2041. The extended sales agreement and price adjustments reflect Hydro-Québec’s agreement to terminate the current contract ahead of schedule.
The MOU also sets the stage for potential contracts involving Gull Island development, a new transmission line in Labrador, and further energy projects. Additionally, it outlines arrangements for Newfoundland and Labrador to sell additional electricity to Hydro-Québec for resale, with returns to N.L. Hydro but without direct sales to other customers.
Williams highlighted the challenges in regulatory approvals and infrastructure construction faced by Hydro-Québec in expanding transmission lines to New England and New York State, emphasizing the importance of the negotiated terms in the new agreement. This shift in power policy signifies a significant departure from past approaches, with Williams endorsing the transformative nature of the new deal.
The agreement marks progress from a previous MOU in 2024, offering more power allocations and federal commitments to finance the Gull Island development. A special debate on the MOU is scheduled in the House of Assembly on September 14, aiming to finalize terms by year-end.