SAINT JOHN — Newfoundland and Labrador Premier Andrew Furey promised Monday that a group of independent experts would monitor negotiations for a final energy deal with Hydro-Québec, but he did not is not committed to revising the agreement in its current form.
The province’s Liberal government opened the Legislative Assembly this week for four days of debate to examine the memorandum of understanding announced December 12 between Hydro-Québec and Newfoundland and Labrador and promising thousands of jobs and billions of dollars in revenue.
Opposition politicians spent much of the first day repeating their calls for an independent review of the interim deal, pointing to past failures of the province’s megaprojects.
“I simply do not understand the reluctance to accept this (contract), which has such a significant impact on opportunities for the people of Newfoundland and Labrador, and allow it to be revised,” argued Tony Wakeham, leader of the Progressive Conservative opposition. “Are you committing to an independent review of this MOU?” he asked Mr. Furey.
In response, the prime minister said independent firms had already provided advice during the negotiations. His government will provide “external, independent advice to the cabinet” in the final stages of the deal. Until then, he said, the government “will commit to continuing independent monitoring, providing regular updates with cabinet (…) and independently supervising the negotiating team.”
“To say that there has been no independent assessment and input so far is dishonest,” the prime minister added.
Under the interim agreement, Hydro-Quebec would pay significantly more for electricity from the Churchill Falls hydroelectric plant in Labrador, while developing additional projects with Newfoundland and Labrador Hydro along the Churchill River.
It ends a 1969 contract that has long been a sore point in Newfoundland and Labrador, because it allowed Hydro-Québec to buy most of Churchill Falls’ electricity at well-priced prices. below market value. Newfoundland and Labrador unsuccessfully attempted to overturn the agreement, in a battle that ended up in the Supreme Court of Canada in 2017.
The agreement was set to expire in 2041, but Hydro-Québec has agreed to end it now. Under the new deal, the provincially owned utility will pay about 30 times more for Churchill Falls’ electricity, resulting in an increase of about $17 billion to the Newfoundland and Labrador treasury. here 2041. It will also pay $3.5 billion to Newfoundland and Labrador Hydro for the right to partner on an expansion of the plant and a new hydroelectric facility further downstream on the Churchill River.
Newfoundland and Labrador’s total budget this year is about $10.4 billion and the province carries a net debt of about $17.7 billion. In 2022, it had the second highest net debt per capita in the country, behind Ontario, according to Statistics Canada.
Part of the province’s financial burden comes from the Muskrat Falls hydroelectric project, which is also on the Churchill River. The project was completed in 2023, after years of delays and billions of dollars in cost overruns. A lengthy public inquiry into the project’s failures resulted in a final report in 2020 containing a long list of recommendations.
They notably included a call for the government to hire “independent external experts” to evaluate and analyze any project with a budget exceeding $50 million. This recommendation does not, however, specify at what point in the project’s genesis these experts should be engaged.
Officials with Newfoundland and Labrador Hydro said several independent companies, including JP Morgan, provided advice during contract negotiations, and representatives are expected to participate in discussions this week.
Mr. Furey recalled that the agreement was preliminary and non-binding, and that he had submitted it for debate in the Legislative Assembly so that it would be transparent and include the public even in the early stages. That was not the case with Muskrat Falls, other Liberals noted Monday.
“We will continue monitoring, with a panel of independent experts who will provide advice to cabinet on negotiations and final agreements,” assured Prime Minister Furey, triggering applause from his caucus. After this analysis, these final agreements will return to the Legislative Assembly for a new vote, he promised.
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.
