Churchill Falls Agreement | The opposition in NL will not vote on the agreement

(Saint John) The Conservative opposition in Newfoundland and Labrador warned Wednesday that it will not vote on the memorandum of understanding with Hydro-Québec concerning Churchill Falls until it has been examined by independent experts.

The leader of the Progressive Conservatives, Tony Wakeham, asked in the House on Wednesday that the vote, scheduled for Thursday, be suspended until an independent review of the provisional agreement is carried out.

He made the request to the provincial legislature on the third day of a debate on the memorandum of understanding unveiled with great fanfare last month by premiers Andrew Furey and François Legault.

The proposed agreement would see Hydro-Québec pay much more than it currently does for electricity produced at the Churchill Falls hydroelectric station, in Labrador. The project also provides that the Quebec state-owned company would develop other large hydroelectric projects with Newfoundland and Labrador Hydro.

However, Mr. Wakeham explained on Wednesday that with the information published so far, it was impossible to know whether the memorandum of understanding was the best possible agreement for the province.

Government officials said independent firms had been retained to provide advice during the negotiations. Representatives from two of those companies – Power Advisory and JP Morgan – were called to appear before the Legislature on Wednesday.

“I think it’s a very good deal,” said Jason Chee-Aloy, managing director of Power Advisory. The Toronto company was hired by Newfoundland and Labrador Hydro in 2023 to assess Labrador’s energy market.

He called the MOU “a necessary step” before negotiating a final agreement, expected in 2026. “So we will know with the (final) agreements whether it is absolutely the best deal – I am sure that this will be the case,” he estimated.

Premier Furey has promised to convene a group of independent experts to provide advice while Newfoundland and Labrador Hydro negotiates the final version of the agreement with Hydro-Quebec. Jason Chee-Aloy agrees with the need for an independent review and welcomes the creation of an expert panel.

The stakes for Newfoundland and Labrador are particularly high given its checkered history with hydroelectric projects. Thanks to a contract signed in 1969, Hydro-Québec acquired the lion’s share of the electricity produced at the Churchill Falls power station at ridiculous prices, then resold it to its customers at a considerable profit. The agreement unveiled on December 12 would end this arrangement approximately 16 years ahead of schedule, and “correct a historic wrong,” according to Premier Furey.

Under the new deal, Hydro-Quebec would pay about 30 times more for Churchill Falls’ electricity, bringing in about $17 billion to the provincial treasury through 2041, or about $1 billion a year on average. Under the current contract, the province receives approximately $20 million per year. And until 2056, average annual revenues are expected to reach 4 billion.

Unlike the 1969 agreement, the new rates paid by Hydro-Québec would be linked to the energy market, meaning Quebec’s payments could increase if energy prices increase. Jason Chee-Aloy said he and his company helped shape the framework for determining these prices.

The time has come for the two provinces to reach an agreement, he added, noting that Quebec is hungry for energy and that the government of Newfoundland and Labrador has been pushing for decades to end this unbalanced contract from 1969 itself by contesting it, without success, before the Supreme Court of Canada.

Mr. Wakeham, for his part, emphasizes that an independent review would respond to the recommendations of a public inquiry into the disastrous Muskrat Falls hydroelectric project, in Labrador, which was completed in 2023 after years of delays and billions of dollars in cost overruns.

Liberal House Leader John Hogan rejected the Conservative opposition leader’s request to delay the vote, arguing that any elements of the memorandum of understanding that would affect Newfoundland taxpayers would anyway be considered by the House. Provincial Utilities Commission – something that had not been done for Muskrat Falls at the time.

The Churchill Falls plant has a generating capacity of about 5,400 megawatts and produces about 34 billion kilowatt hours per year – about enough to power Denmark, according to the U.S. Energy Information Administration.